No one has to tell Lloyd’s of London that climate change is for real. In a new report, the world’s oldest and largest insurer says, “Earth’s global climate system is warming. This conclusion is supported by a large body of evidence” from scientists and that “increasing greenhouse gas concentrations in the atmosphere” are “largely due to human activity such as combustion of fossil fuels and land use change.”

Such changes have caused Lloyd’s to blame almost a third of its losses in 2012’s Superstorm Sandy on climate change.

The storm cost the insurance industry about $35 billion in losses. Lloyd’s puts 30% of that, $8 billion, on storm surge in Manhattan caused by rising ocean levels.

Given the reality of climate change, Lloyd’s advises insurers to update their financial models and start factoring in the effects of global warming.

Lloyd’s notes that the financial costs of climate-change-related damage have skyrocketed from an average of $50 billion a year in the 1980s to $200 billion during the past 10 years.

-Noel Brinkerhoff

To Learn More:

Catastrophe Modelling and Climate Change (Lloyd’s)

Lloyd's Calls on Insurers to Take into Account Climate-Change Risk (by Julia Kollewe, The Guardian)

National Climate Assessment (GlobalChange.gov)

Insurers Prepare for Climate Change…Except in U.S (by Noel Brinkerhoff and David Wallechinsky, AllGov)