Booth: Last year was not the first bad year. Losses from natural catastrophes have been doubling every ten years. This is the result not only from an increase in weather-related events but even more so from the surge in building along coastlines and other high-risk areas.

The insurance industry has suffered tens of billions of dollars in payouts and many companies have gone out of business as a result of weather-related losses such as Hurricane Andrew in 1992. Climate change is expected to exacerbate these economic challenges.

Booth: Insurers can start to help address this by taking a proactive approach to influencing land use development and planning, and also by working with governments on introducing better building codes to prevent large-scale damages. Insurers can also work with their customers to educate them about the true risks involved with building along US coastlines and fire-prone areas.

Booth: Yes. There are many other weather-related risks that are likely to be exacerbated by climate change. For example, the risk of forest fire is expected to be intensified by current climatic trends in many parts of the US.

Higher temperatures, drier conditions, and success in fire suppression over the recent decades have resulted in high fuel loads. This is exacerbated by increased development in heavily forested areas, meaning many communities are at a greater risk of increased losses from wildfires.

Booth: Climate change is affecting the hydrological cycle, which also affects floods. Glaciers are melting, snowmelt is occurring earlier, and on average, there is an increase in "rain-rather-than-snow" winter precipitation. All of these factors contribute to early spring floods. Combined with distorted market signals as a result of government subsidized flood insurance, flooding will likely continue to generate major economic losses.

Booth: We need to better integrate the latest science in our cat risk planning. We have in fact learned from major weather-related events like the Hurricanes Andrew in 1992 or Katrina in 2005 and have introduced sophisticated risk models that enable us to calculate the damages.

Yet, a dilemma remains: Those models make an assumption about the future, based on past data. But scientists tell us that climate change will make weather-related events occur more frequently and that their impact will be more severe.

We need to find a way to integrate the latest scientific forecasts into our existing risk planning tools.

We won't be able to prevent climate change from happening. After all, it is already taking place. But insurers have a vested interest in not just planning for "what if" scenarios, but in addressing the root cause of global warming - heat-trapping greenhouse gas pollution. That's why Allianz is investing in clean energy and cutting our own emissions significantly. Fireman's Fund, one of our subsidiaries plans to introduce commercial insurance policies designed to support and encourage "green" energy efficient buildings that cut customer's energy bills, as well as the pollution that causes global warming.

Booth: Sure. This is a creative industry that specializes in managing risks. We found solutions to the almost unimaginable risk of terrorism so that airplanes did not have to be permanently grounded after 9/11. Using this same ingenuity, we will also be able to help clients manage some of the risks from climate change.

In fact, the insurance industry has always played a key role in helping business and society understand new risks. We provide "an early warning," if you will. Allianz believes it is already seeing signs that climate change is a serious emerging risk, and we expect it to remain a top-tier issue for the insurance industry for many decades to come. I believe it is our responsibility to address and tackle this risk, making homes and businesses safer and more secure for our clients.

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