Page 22 - Insurance Times January 2024

What causes a significant problem? Heat
Firstly, carbon dioxide (at 420ppm) and methane released "I believe that the Indo-Gangetic belt and the Sundarbans
due to fossil fuel usage cause the greenhouse gas effect will be among the most affected parts of the country, since
(GHG). Since the industrial revolution, the average multiple climate change impacts are playing out in those
temperature of our planet has gone up by 1.5C. Some parts, regions. The Indo-Gangetic plains are hot and humid. Humid
including the Arctic Circle, are warming by multiples. heat is much more dangerous than dry heat, and a
Together with pollution and biodiversity loss, this is causing simultaneous spike in 'humid heatwaves' there can
havoc in the form of floods, droughts, forest fires, thawing significantly raise the risk of cardiovascular and neurological
permafrost, sea-level rise, ocean acidification, glaciers conditions," warns Dr Chirag Dhara, an eminent climate
melting, and heatwaves. Some of the resultant changes, expert.
according to scientists, could be irreversible.
A study by McKinsey - Will India get too hot to work? - raises
As a front line of the insurance industry, brokers ought to a red flag around the fact India could become one of the
be mindful of these developments. Since brokers are a very first places in the world to experience heatwaves that cross
diverse lot, the attempt is to keep this paper as simple as the survivability limit for a healthy human being resting in
possible. Nevertheless, the gravity of the existential crisis the shade, and this could occur as early as next decade.
on hand should not be underestimated. Climate is a systemic Moreover, rising heat and humidity levels will impact labour
risk. It cuts across all silos. The following are a select few productivity and economic growth in an economy that relies
issues, but they are all interrelated. substantially on outdoor work. Lost labour hours due to
extreme heat could put approximately 2.5%-4.5% of GDP
at risk by 2030, equivalent to roughly $150bn-$250bn. The
Water study estimates the number of daylight hours during which
One of the most contentious drivers of climate crisis. Most outdoor work is unsafe will increase approximately 15% by
industries are water intensive. Some 25 countries and 25% 2030, compared with today's levels.
of the world's population face extremely high water stress.
Likewise, marine transits passing through, for example, the This will have implications for outdoor work, agriculture,
Panama Canal ought to be watched. The lack of proper transportation, wellbeing of infrastructure and lifestyles in
rainfall and the resultant drought is causing serious delays general.
in the crossing of ships. It has turned into a huge maritime
traffic jam, with more than 200 ships stranded on both sides Supply chains
of the waterway. McKinsey warns: "As climate change makes extreme
weather more frequent and/or severe, it
increases the annual probability of events that
are more intense than manufacturing assets
are constructed to withstand, increasing the
likelihood of supply chain disruptions."

Jacques Leslie, writing for Yale Environment
360, explains how "extreme weather, from
floods to wildfires, is increasingly hammering
ports, highways and factories worldwide, and
experts warn these climate-induced disruptions
will only get worse".

Credit risk
Moody's believes the credit impact of "a
delayed and disorderly carbon transition" is the
greatest threat to financial firms, as the
increasing frequency of catastrophic weather
events will lead to loan defaults and rising
insurance claims.

20 January 2024 The Insurance Times