LONDON - The general insurance industry may not be able to cope with the increased frequency and severity of floods and typhoons brought about by climate change, the Association of British Insurers (ABI) said on Wednesday.

ABI research, commissioned from Britain's Met Office and catastrophe risk modeling firm AIR Worldwide, examined the implications of 2 Celsius, 4C and 6C increases in global mean temperature on inland flooding and windstorms in Great Britain, and typhoons in China.

The ABI says a 2C is rise inevitable and this will increase average annual insured losses in Britain from inland flooding by eight percent, or by 47 million pounds ($77 million), to 600 million pounds. This would indicate a 16 percent theoretical impact on insurance pricing (with an annual GDP growth of 2.25 percent assumed).

Nick Starling, the ABI's Director of General Insurance and Health, told the Climate Change conference in London that the continued widespread availability of property insurance in the future depends on taking action now to manage the threats of climate change.

The clear message to world leaders meeting at the UN's Copenhagen Climate Change Summit in December is that they must reach agreement on ambitious emission reduction targets.

And, closer to home, the UK Government needs to push ahead with the Flood and Water Management Bill, and ensure long-term investment in flood management as a priority, so that the long-term flood risk is better managed, he said.

The impact of losses from weather hazards can also mean increases in insurance capital requirements, to ensure that insurers hold sufficient capital to cover the additional risks. With a 2C temperature increase, the ABI reckons additional insurance capital of 1.65 billion pounds would be required for a 200-year flood.

If insurers do not hold sufficient capital, this is likely to result in reduced availability of insurance, the ABI said.

Cyclone tracks are excepted to shift as a result of an increase in global temperatures and this could increase the frequency of storm passage over the UK.

The ABI said that even a modest systematic change in storm tracks could increase average annual insured losses from windstorms by 25 percent.

The impact of temperature change on typhoons in China was shown to be greatest in terms of associated rain. Rain associated with a typhoon is likely to increase by 13 percent, 26 percent and 30 percent under the 2C, 4C and 6C temperature increases respectively.

Professor Julia Slingo, Chief Scientist at the Met Office warned that a further temperature rise to 4C would make some parts of the world uninhabitable.

We have committed to a different world than the one we are used to, she said at the ABI's Climate Change conference today.

A compelling case to reduce commissions is because a 2 C increase in temperatures may be livable, but any higher would be life changing for certain parts of the world -- that is why the negotiations at Copenhagen in December are vital.

The ABI called on global governments to ensure they prepare now for the inevitable consequences of climate change and invest wisely in mitigation and adaptation measures.

(Editing by Andy Bruce)

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