The triple-whammy of hurricanes Harvey, Irma and Maria hitting the US and Caribbean contributed to a record $US135 billion in payouts globally on natural disasters. Wildfires in California made things worse and, for Australian general insurers, Tropical Cyclone Debbie added to the pain. Tom Herbstein, of Cambridge University’s insurance industry-funded project ClimateWise, summed it up in saying “climate change fundamentally challenges the existing insurance business model.” And understandably there have been some drastic responses from within the industry. Hannover Re was even forced to sell its entire stock portfolio, worth €953 million ($A1.5 billion) , prompted by natural disaster claims. Costly natural hazards are nothing new to QBE or indeed any of Australia’s big three general insurers. Loading

Last year, individual large claims and natural hazards cost QBE $1.7 billion, or 15 per cent of the company’s net earned premium. Compare this to the seven year average of 8.1 per cent to 2010, and you get an idea why QBE called it “unprecedented”. Additionally, over the past decade, IAG under-provisioned for natural hazard claims by almost $1 billion while Suncorp under-provisioned by $1.9 billion. It appears none of our general insurers are keeping up with the pace of climate change. By January, QBE had received its fourth downgrade of the financial year, to the frustration of investors and analysts.

With QBE’s annual report due out at the end of this month, it would be reasonable for investors to expect a measure of climate risk disclosure from the insurer. So far, nothing has been forthcoming. Though QBE is hardly alone. So far, only seven ASX top 50 companies have disclosed analysis of how they perform in a scenario where global warming is held to 2ºC or below. Although every company faces climate risk to some extent, for QBE it is both acute and direct, since it stems from the impacts of climate change manifesting as claims. Plus, of course, managing the thorny issue of certain parts of the world simply becoming uninsurable. The Climate Council has highlighted the increases in extreme weather and climate events Australia is facing as climate change intensifies. But gradual changes to the climate also pose risks to transport, agriculture, infrastructure and most other sectors. For insurance companies, these all have a dollar value attached and bringing those figures to light will show the broader public just how acute the risks of climate change are.

That’s why it’s so important that insurance companies disclose their climate risks and why we need to be ready for what they say. Global movement Globally, insurance companies have begun responding to the threat of climate change. While most are keeping their assessment of the risk from climate change a closely guarded secret, many are at least moving to remedy one of the most stark contradictions in the sector: its exposure to highly polluting industries. AXA, Allianz, Aviva, Lloyds, Munich Re, SCOR and Swiss Re are among those to have divested from coal companies from their investment portfolios, and/or restricted underwriting to the coal industry. These actions are undertaken on the basis that it is incongruent for insurance companies whose business models are at exposed to th ephysical climate change impacts to be invested in or actively supporting the source of the problem.

Insurers are divesting their coal investments Credit:Janie Barrett Even Suncorp said at its AGM last year it would reduce exposure to fossil fuels in its equity portfolio to a negligible amount over the next two years. QBE, however, has done no such thing. Last year, chief executive John Neal revealed QBE was an insurer of Adani and refused to rule out support for projects like the Carmichael coal mine in the Galilee Basin. Perhaps with new leadership in Pat Regan, investors will start to see QBE join other insurers in disassociating themselves from the activities that cause climate change and disclosing the extent to it is a threat.

Investors need to know. We all need to know.