Insuring against climate change
As the cost of the clean-up in Cumbria rises to over £100m ($165m), after this month's record rainfall, the world's biggest insurer has told me that his industry should be spending 10 times more than that each year to help avert the worst effects of climate change.
The cost of insuring against the effects of climate change - and of not insuring - is preying on the minds of the big insurance companies. Scientists are always reluctant to attribute single catastrophic weather events, like a storm or heavy rain or drought, to global warming. Most climate scientists, though, do expect climate change to increase the frequency of costly, extreme weather. And for insurers, making sense of the pattern of events like this is their business.
For Newsnight, I went to Munich to ask the head of the largest insurance group in the world, Munich Re, how he sees that pattern changing. Nikolaus von Bomhard, chief executive officer, agreed that Hurricane Katrina, and the tens of billions of dollars paid out by his industry, was a wake-up call for everyone, not just for politicians.
Just a few per cent of the insurance industry's financial resources could set the world on a low-carbon path, he said.
I asked him how much of Munich Re's money under management he's now investing in green technology projects that could help avert the worst effects of climate change, and lower insurance costs. "I would dare to say that something from the 1-to-2% point range is possible, and that in our case is already something like $2 billion."
Doesn't sound very much, considering the work that needs to be done? Well that's what I thought - and here's how von Bomhard answered that. "It is not a free philanthropic exercise that we do here. So it must make sense also for our policy and shareholders. But don't forget that if the entire insurance industry did that, they have investments under management of several trillions... then a lot of money is coming into that pool - a lot of money..."
One or two percent of several trillion dollars? That's tens of billions... every year.
Matt Huddleston, Principal Climate Change Consultant at the Met Office, is working with insurers, bringing together weather and climate research to help equip the industry as it faces an exponential rise in the cost of payouts.
"They're terrified that they might have a year where they have a lot of damage from winter windstorms in Europe, a lot of land-falling hurricanes in America and hail damage in the Midwest - all in the same year," he told me.
"And the question is, can we understand those risks that can be predicted in the future, and what does that mean for the industry if those things are connected and not independent?"
Von Bomhard put it another way: "If we do not do something now to contain the development of these risks they will - we will - end up with an uninsurable event because the capacity will not suffice to insure any more. So it's not about protecting our business rather to develop jointly with all those constituencies and make sure it stays within let's say quantities that can be insured."
At the company headquarters, we caught a glimpse of Munich Re's determination to understand the changes the world, and it, might face. On one floor, the company employs a mini academic department of weather and climate experts, who first spotted an increase in frequency of catastrophic weather events in the 1970s, long before climate change became a household phrase.
And there's another surprise beneath the HQ itself - built just before the First World War, and with the feel of an imposing stately home. It's linked to buildings around it by a network of tunnels, brightly-lit in psychedelic colours. The men and women in formal dark business suits strike a contrast as they nip through the strange, mind-bending corridors.
And the sums of money it and the rest of the insurance and re-insurance industry commands are mind-bending too, according to Nick Mabey, of environmental think tank E3G. "They have huge amounts of money under management. We need huge investment into the low carbon sector, over a trillion a year to 2030 in low carbon." He told Newsnight that the time for these companies to act is now.
"If we started to see the insurance companies coming forward and saying to governments, 'We want to buy your green bonds, we want to invest in your green funds overseas', that would be very powerful and that would help government convince other parts of the private sector that their was money available in liquid in this area..."
This weekend Gordon Brown called for a start-up fund of $10bn (£6bn) a year to help the developing world to adapt to climate change and move to low-carbon economic growth. Compare that with the clout of the insurance and pensions world. At last look, even after the financial crisis, together they command some $60-odd trillions...
You can watch my report on Newsnight, at 10.30pm on BBC2.