'Risks aren't worth it': QBE says parts of planet becoming uninsurable due to climate concerns
Global insurance giant QBE has warned climate change poses a material threat to its business and the entire economy as its chief executive Pat Regan said premiums were at risk of becoming too high in areas exposed to repeated, extreme weather.
QBE has been forced to cut operations in countries where the climate risk is too high and Mr Regan said severe weather means customers in certain may be priced out of certain types of insurance in Australia and around the world. "We got out of places like the Philippines, Thailand, Chile, Puerto Rico [where] it was just too much climate change weather impact risk there that the risks just weren't worth it," Mr Regan said.
QBE chief executive Pat Regan delivers the company's full year results. Credit:Louie Douvis
Mr Regan said there had always been parts of the world that were difficult to insure, but as floods and fires become have dominated headlines this summer, this risk was increasing across "swathes of Australia" and could potentially price out customers from home and business property insurance.
Mr Regan said climate change was a "big topic" in the sector, requiring the insurance giant to "up its game on a number of fronts". QBE boosted its reinsurance program for catastrophic events to $2 billion in a process that would be reassessed each year, Mr Regan said.
"What that means is you could have a one-in-200-year storm and we'd be protected," Mr Regan said.
"Whatever your more broad thoughts on climate change are, the evidence is clearly there that the frequency and severity of weather events is increasing over time.
"The evidence is there for all to see that the amount of weather events globally, not just in Australia, is consistently rising and most of the worst years on record have happened in the last 10 years."
The insurer reported a one per cent drop in revenue to $22.6 billion in its full year results on Monday. Profit after tax was up by 41 per cent as QBE sold off a suite of assets including its insurance opens in Indonesia and the Philippines, Australian livestock-in-transit businesses and personal lines business in North America. The statutory net profit after tax was $550 million, up 41 per cent from the prior year.
In December, QBE announced a profit downgrade following an especially wet spring in North America that saw hail, sleet, frost and snow ruin crops in the region, causing the company's underwriting activity to become unprofitable.
Despite this, the group reported a statutory net profit after tax of $550 million
The group is investing in artificial intelligence technology to improve its underwriting and claims processes.
The earnings per share for 2019 is 62 cents, compared to 43 cents last year and the franked dividend per security paid out 27 cents.