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Member, Beacon International Group, Ltd.
WASHINGTON--Governments must take steps to limit greenhouse gases and enact "stricter and enforceable zoning and building codes" to deal with the impact of climate change, a reinsurance executive told the Senate Homeland Security and Government Affairs Committee on Thursday.
But governments should not provide a financial backstop to natural catastrophe risks, said Andrew Castaldi, senior vp and head of catastrophe perils, Americas, for Swiss Reinsurance America Corp. in testimony during a hearing regarding the impact of climate change on private and federal insurance programs.
Mr. Castaldi noted that some insurers have reduced their exposure along the U.S. Gulf Coast and that Florida property owners are facing increased insurance costs.
While some have suggested those developments show that natural catastrophes cannot be insured by the private market and a government backstop is needed, Mr. Castaldi said Swiss Re does not share that view.
"Because these risks can be modeled by the private sector and are random in nature, they are insurable," Mr. Castaldi said, adding that the "largest events can and have been absorbed" by the private market.
"A government backstop for such risks is inappropriate public policy," said Mr. Castaldi. Instead, governments should take steps to mitigate future damage such as enforcing better zoning and building codes, he said.