Suncorp was happy with the government's stance in Paris. Credit:AP More than ten years ago, in the days when climate change was viewed by most in mainstream business as a fringe issue, the then head of Insurance Australia Group Michael Hawker was one of a number of insurance executives that was at the forefront of the environment lobby. Back then insurers were firm about the connection between carbon emissions, global warming and the effect it was having on aberrant weather events. It was in this industry's interests to call it out as it was having a negative effect on their businesses, which were having to bear the cost of weather-related natural disasters. Hawker spoke ten years ago of the outworking of global warming. In a speech at the time, he said: "One of the consequences of this is the increasing costs of claims in the marketplace, as insurers need to pay out on these events. We respond to that in two ways: the obvious one is to price the cost of insurance to reflect the increased risk, but the other is to explain to the community the likely costs of environmental warming, and therefore trying to change behaviours to prevent that cost occurring." But the industry is not front and centre in the climate debate today. Rather its lobbyists are more concerned with pushing the government to improving infrastructure to deal with the effects of catastrophic events. Things like improving building standards so structures can withstand cyclones, or building stronger levy banks around rivers to mitigate floods

Climate change could have serious ramifications for insurers such as Suncorp. Credit:Getty Images This is not to say that the boards and managers of insurance companies are climate change sceptics. It is more a point about their desire to lobby for outcomes that will reduce their claims in the short to medium term rather than lobby for the longer term outcomes that flow from reducing emissions over decades. Insurance companies have long argued (quite effectively) against levies and taxes to be imposed as a government means to adapting to climate change. As such, insurers were particularly pleased with the adaption and resilience position that the current government took to Paris. The Insurance Council of Australia said this week: "The strategy says improved planning and investment in disaster-resilient infrastructure can reduce damage to property and communities. The flow-on effect is to help lower insurance premiums.

"Mitigation and resilience are a vital part of the equation, especially for cyclone and flood-prone regions. This strategy is strongly aligned to the industry's view, and also with recent Productivity Commission reports into climate change adaptation and disaster relief funding." Additionally it seems that the Australian insurance industry feels it is not in its interests to push a longer term armageddon angle in its lobby. In response to a recent speech from the Bank of England governor, Mark Carney, in which he contended that "climate change may pose a significant long-term financial risk to insurance companies", the Insurance Council of Australia said these comments were more relevant for the northern hemisphere life and general insurance industries. Australian insurance companies do not want to be caught in the same trap as the banks, where regulators will insist they hold higher levels of capital to deal with climate related disasters. "Australia's general insurance sector is well managed and tightly regulated, and has consistently demonstrated it is adept at coping with the extreme weather conditions it regularly faces. It is exceptionally well provisioned from a capital adequacy perspective and also has strong reinsurance support for catastrophes," was the response from the insurance council.

A report from ratings agency Fitch affirmed the ratings yesterday for most Australian and New Zealand insurers for the next 12 to 24 months but added factors that would lead to a deterioration in the credit profile would be a severe economic downturn and persistent and large natural catastrophe losses. Meanwhile market watchers were more concerned with Suncorp's unexpected profit downgrade on Monday taken by its recently installed chief executive, Michael Cameron. The key profit measure, the insurance trading ratio, will fall to 10 per cent in the December 2016 half year, down from an underlying 14.7 per cent in the year to June 2015. Cameron maintained the group could improve its fortunes, that the group remained in good shape and that the downgrade was the result of short-term operational challenges in the general insurance division. It wasn't enough to calm twitchy investors, who sold the stock off more than 9 per cent.

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