Insurance industry leaders have declared it is now clear that insurers must begin formally including climate change in their calculation of future catastrophes to protect to protect their bottom-lines.

In a 41-page report released Thursday, Lloyd's of London—the oldest and largest insurance market in the world—warns, "Scientific research points conclusively to the existence of climate change driven by human activity," and therefore global warming must be included in "catastrophe modeling tools" moving forward.

Insurers must account for a whole host of problems, including rising sea levels, which can lead to severe "weather events" such as Superstorm Sandy.

"The approximately 20 centimeters of sea-level rise at the southern tip of Manhattan Island increased Superstorm Sandy's surge losses by 30% in New York alone," reads the report. "Further increases in sea-level in this region may non-linearly increase the loss potential from similar storms. Catastrophe models that dynamically model surge based on current mean sea-level already factor this increased risk into their projections."

Failure to conform with the changing reality will be, well, expensive. "2011 is regarded as a record year for natural catastrophe, with insured losses costing the industry more than $127 billion," warns the report.

Catastrophe modeling, a relatively young process, can "help companies anticipate the likelihood and severity of potential future catastrophes before they occur so that they can adequately prepare for their financial impact," urges the report.

What the study does not clarify is who will bear the burden of paying for the human tragedies to come.

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