Allianz welcomes details on emissions trading scheme design

Sydney, 16 July 2008

Allianz welcomes and broadly supports the framework set out today in the Government’s Carbon Pollution Reduction Scheme Green Paper, in particular, the greater clarity provided around key design features of the proposed emissions trading scheme (ETS).

Average insured damage from severe weather events has increased tenfold from an average of around $US3 billion per annum in the early 1970s to an average of around $US30 billion per annum since 2000, and Allianz research estimates that this will rise further to an average of $US41 billion per annum over the period 2010-19. And while trends in urbanisation and coastal development have played their part, the main cause is the increase in the frequency and severity of severe weather events.”

Nicholas Scofield, General Manager Corporate Affairs, said “Allianz, and the insurance industry generally, has a strong vested interest in seeing the introduction of a comprehensive global framework for emissions reduction in order to reduce the impact of climate change. This is critical in order to halt the already evident trends towards more frequent and severe weather events and the consequent increase in the cost of natural catastrophes.”

Allianz research shows that the number of Category 4 and 5 storms has increased from around 40 per year in the early 1970s to around 90 per year since the 1990s. Moreover, the number of natural catastrophes, the vast majority of which are weather related, has increased from around 30 per year in the early 1970s to around 120 per year since the 1990s. And while some of these rises can be explained by improved detection and measurement of storms, this only accounts for part of the observed increase.

Mr Scofield stated, “it is important that we put in place effective arrangements to allow Australia to play its part, along with other countries, in a global agreement to reduce greenhouse gas emissions, and a well designed ETS will allow us to do this while minimising any negative impact on the Australian economy.”

Recent research commissioned by Allianz and WWF shows that Australia’s distance to its current Kyoto target is -3.5%, which means we Australia is more than on track to meet its obligations over the 2008-2012 Kyoto commitment period. Compared with the G8 countries, only France, the UK and Russia (an exception) were also on track to meet their Kyoto targets.

Mr Scofield emphasised that, “the fact that Australia is on track to meet its Kyoto target, allows us to move cautiously over the initial years of an emissions trading scheme and allow a carbon price to be eased into the economy. This will give directly affected businesses and other carbon market participants time to learn to adapt to the new regime without the risk of significant adverse financial impact if they make some mistakes in the early stages.”

“Allianz therefore welcomes the Government’s announcement that the scheme would have a price cap for the first five years of operation. This will allow Australia to avoid the risk of spikes and excessive volatility in the price of carbon, and to align the impact on the Australian economy with the action being taken by other countries thus avoiding undue competitive disadvantage,” Mr Scofield added.

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Allianz Australia

Best General Insurance Company 2006*
Best General Insurance Company 2007*

The Allianz Australia Group operates in Australia and New Zealand. It is one of Australia’s largest general insurers, a leading private workers’ compensation insurer, and also provides life insurance.

Allianz Australia delivers a wide range of personal, commercial and corporate insurance products and services. AAL is proud to be of service to more than 2 million policy holders and over 50% of Australia’s top 200 BRW listed companies have some form of insurance cover with the group.

Allianz Australia offers a wide range of insurance products and services including car insurance, home insurance and Life insurance.

Allianz Australia has approximately 3300 staff. In 2007, the company achieved a gross written premium exceeding AU$2.4 billion and investment assets of approximately AU$5.5 billion. Allianz Australia Group is a wholly owned subsidiary of the worldwide Allianz Group, one of the world’s largest financial services companies.

Allianz’s commitment to social, environmental and economic sustainability has been acknowledged internationally by the Dow Jones Sustainability Index, which recognised Allianz as the most sustainable general insurer in the world in 2007. In Australia, Allianz is a member of the Greenhouse Challenge Plus program, which is a cooperative partnership between industry and the Australian Government that aims to reduce greenhouse gas emissions.

*Australian Banking and Finance Insurance Awards