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Significant move from the Bank of England’s governor as UN climate meeting opens in Lima

Yesterday, Pilita Clark, Environment Correspondent of the Financial Times, reported that the Bank of England is to examine the risks fossil fuel companies pose to the financial stability of the insurance industry which underwrites all others:

mark carney

“Mark Carney, its governor, has written to the  which has been investigating the issue, informing them that his officials have discussed the idea that most of the world’s proven coal, oil and gas reserves may be “unburnable” if global warming is to be kept within safe limits”.

Mr Carney expects that the Financial Policy Committee, which is responsible for identifying and reducing systemic financial risks, “will also consider this issue as part of its regular horizon-scanning work on financial stability risks.”

Joan Walley, chairwoman of the Environmental Audit Committee, said, “Policy makers and now central banks are waking up to the fact that much of the world’s oil, coal and gas reserves will have to remain in the ground unless carbon capture and storage technologies can be developed more rapidly. It’s time investors recognised this as well and factored political action on climate change into their decisions on fossil fuel investments.”

The Bank of England has asked insurers if they knew when changing temperatures or more frequent extreme weather disasters might start affecting the viability of their business model.

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The FT article – free registration: http://www.ft.com/cms/s/0/189f21d8-7737-11e4-a082-00144feabdc0.html#axzz3KcrcDzI7

The Lima meeting: http://www.theguardian.com/environment/2014/nov/30/lima-climate-change-talks-global-warming-lima-peru

Long term insurance anxieties: Worldwatch: http://www.amazon.com/Vital-Signs-1997-1998-Trends-Shaping-ebook/dp/B00JVSJOCW#reader_B00JVSJOCW – from our database:

“Vital Signs 1997 issued by the World-Watch Institute in Washington, lists and gives the total cost of last years’ droughts, hurricanes and flooding at $60bn, almost twice as high as the 1995 record.

“Its vice-president is reported as being ‘inclined to blame global warming’ as being the underlying cause of this record damage – the report noting that emissions of carbon dioxide, the primary cause of global warming, reached a new record last year.

“Figures collected by the Munich Reinsurance Company show that losses from weather-related disasters had totalled more than $200bn in the last six years – four times as much as in the whole of the 1980s. (Geoffrey Lean, Independent on Sunday: 1.6.97)”.

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Time for Government and the insurance industry to ditch the so-called ‘unfettered free market’ and agree a new scheme

The National Flood Forum is asking everyone to sign an e-petition on the Government website: “People need Flood Insurance”.  The petition calls on government “to take immediate action that will ensure flood victims and flood hit communities can obtain affordable flood insurance after 2013, in the interests of individuals, communities and the national economy.”

Chairman of the Flood Forum, Charles Tucker said “Government and the insurance industry have been talking about a replacement for the “Statement of Principles” now for over two years – and these talks are still nowhere near a conclusion . . . It’s time for Government and the insurance industry to stop arguing and agree a new scheme. Flood-hit households need reassurance that they will be able to get affordable flood insurance in future.”

The “Statement of Principles” runs out in June next year and 200,000 households may find themselves unable to get flood insurance if there is no agreement on a new scheme.

Over 7000 homes have flooded since June, according to the Environment Agency’s most recent figures. Every one of these can now expect a hike in their premiums – and in some cases insurance may be withdrawn.

The full text of the e-petition:

“People need Flood Insurance”

We call on government to take immediate action that will ensure flood victims and flood hit communities can obtain affordable flood insurance after 2013, in the interests of individuals, communities and the national economy.

Households that have flooded and those reckoned to be at high flood risk face massively increased insurance costs in a free market, as premiums rise to reflect individual risk.

Insurance underpins the security of people’s homes and their value. The end of the “Statement of Principles” in 2013 threatens an unfettered free market that could leave 200,000 homes unable to get flood insurance. This would

– Decimate the value of homes, possibly making them totally unsellable
– Blight the health and wealth of individuals and whole communities
– Blight local economies, particularly housing markets and small businesses
– Blight the lives of older and vulnerable people, who may never recover fully from flooding”

ENDS

For further information contact:

Amanda Davies
Tel 01299 403101
Amanda.davies@floodforum.org.uk
Charles Tucker, Chairman
Telephone: 01386 462441
Charles.tucker@floodforum.org.uk
Paul Cobbing, Chief Executive
Mobile: 0777 3355 181
Email: paul.cobbing@floodforum.org.uk
 
Note:

The National Flood Forum is a charity dedicated to supporting and representing flood risk communities. It helps people to recognise, understand and reduce their flood risks and also helps people to recover if they have been flooded. The National Flood Forum also works to ensure that the needs of communities are fully recognised by Government, Environment Agency, local government and the insurance industry.

The National Flood Forum provides a range of help and services. For example, anyone can call our helpline for advice on flooding issues– 01299 403055, or visit our website – www.floodforum.org.uk.”