Nature takes its revenge: David Nicholson-Lord argues that Lloyd's investors should learn that it pays to be green

THE world is full of dissatisfied insurance customers but few took their complaints to the lengths of the American who was so fed up with seeing his claims rejected because they were Acts of God that he decided to sue his local churches. His suit was received with scepticism: the law doesn't mix well with metaphysics. Given the debacle at the Lloyd's of

London reinsurance market, however, we may have to review this position. Perhaps we could borrow some metaphysics from the ancient Greeks.

The arguments over the staggering losses at Lloyd's, which now look likely to reach almost pounds 9bn for the five years to 1992, reached the High Court last week, with more than 3,000 investors, or Names, trying to claw back over pounds 600m-worth of claims they have paid out. Had it not clearly involved so much misery, the spectacle of Britain's plutocracy - Tory MPs, impresarios, peers and tennis stars - imploding over the Lloyd's affair might well have afforded the rest of us some quiet satisfaction. With reason, many have viewed it as a modern morality tale - of ignorance punished and greed confounded. But if there is an element of hubris about the Lloyd's case, it goes far beyond the financial. Behind the arguments in court are some fundamental questions about human relationships with the natural world. These are the kinds of questions that people in financial and insurance markets prefer to ignore. Now, Nature has taken revenge.

The Lloyd's saga begins with asbestos, a material noted for its fire-proofing properties for at least a thousand years: the Holy Roman Emperor Charlemagne is said to have impressed his courtiers by extinguishing a fire with an asbestos tablecloth. The hazards of asbestos were first recognised at the end of the last century but it was not until the late 1920s that asbestosis was recognised as an occupational disease and not until the 1970s and 1980s, when its use was widespread in buildings, that the cancers of the lung and stomach it causes began to translate themselves into claims against companies, and thus against their insurers. More than 200,000 asbestos claims have been made, about half of them have been settled and the London insurance market has paid out about pounds 2bn, two-thirds of it from Lloyd's.

Asbestos is a man-made tragedy. It is produced by mining - the fibres which cause the damage are separated from the rocks in which they are embedded. There would thus have been no asbestos-related cancer epidemic, and no huge claims to disturb the slumbers of Lloyd's Names, if the asbestos had been left in the ground. If modern medical techniques - toxicology or epidemiology, for example - had been available when asbestos was first produced, we might have been more wary of its long-term consequences. The 'precautionary principle' advocated by environmentalists - which means, broadly, that you don't fill the biosphere with new substances unless you are fairly sure they are safe - might also have averted, or mitigated, the disaster. Thanks to our greater understanding of the links between health and the environment, we would probably handle asbestos rather better if it were 'discovered' now. We might even have insisted it stayed in the rocks. The story of asbestos is indeed one of mismanagement - but of a natural resource rather than an insurance market.

This is just one aspect of the growth of the human species. Over the last 10,000 years man, from being one of many small lease-holders on the planet, has turned into its landlord, and in the process has become an instrument of geological and climatic change. Barring cataclysms, our population, 10 million at the end of the last Ice Age, will reach 10 or 11 billion by the second half of the next century. Forty per cent of the world's photosynthetic production from land - the growth produced by the sun's action on plants - has been appropriated by humans. We remove forests, divert rivers, destroy seas, pump gases into the atmosphere that melt ice-caps and shrivel ozone layers. Our traffic is global and so is our pollution. Collectively, human impact is beginning to assume what would once have been thought of as divine proportions.

Disasters, in consequence, appear to be increasing in scale and frequency. According to a report from the environmental organisation Earthscan, Natural Disasters: Acts of God or Acts of Man?, ecological stresses caused by human impact meant that six times more people died in the 1970s through floods or drought than in the 1960s. The link between 'natural' flood disasters in low-lying areas of Asia, and deforestation - caused by humans - in the Himalayan watershed is well known. Many scientists also believe there is a connection between man- made global warming and greater climatic turbulence - more tropical storms and hurricanes, for instance. Jeremy Leggett, director of science for Greenpeace, points out that several leading insurance companies - and the odd Lloyd's syndicate - have deployed their own 'greenhouse' teams of meteorologists and climatologists, some of whom see the future in apocalyptic terms. According to the world's largest reinsurance company, Munich Re, in a report on windstorms written in 1990: 'For the first time in the history of our planet, mankind is about to change the climate significantly and possibly irreversibly, without having any idea of the consequences that will have.' These, remember, are not besandalled greenies speaking but men in suits with calculators.

However, Munich Re's conclusion is not strictly true. We do have an idea of the consequences. Some of them were debated in the High Court last week: the European storms of early 1990, Hurricane Hugo in the United States. The 1980s was the hottest and one of the most turbulent decades on record and insurers paid a high price. Between 1966 and 1986, according to Leggett, no single natural catastrophe cost (at 1992 prices) more than dollars 1bn. Between 1987 and 1993 12 did. In 1992 losses from 'natural' catastrophes reached a record - dollars 27bn.

Asbestos claims, damage from storms, flooding and pollution - these are the reason why thousands of Lloyd's Names have been ruined, and it looks increasingly like a roll-call of man-made disasters. Some people believe the insurance industry worldwide may collapse under the strain, although by claiming such disasters are acts of God, companies can avoid shouldering much of the burden. The last two years have produced another huge crop of disasters - storms in Europe, floods in the UK and in the American Midwest and the Mississippi basin, the Los Angeles earthquake - yet the companies paid out relatively little. With the prospect of sea levels rising across the world because of global warming, companies are refusing to insure buildings in threatened coastal areas. However, if owners of buildings cannot afford or obtain insurance, the burden of disaster may simply be transferred to other parts of the financial sector - banks or building societies which have lent money on property, for example. If insurance cover was withdrawn from significant areas of the economy, the effects would be incalculable.

There is a final lesson from this tale of man-made woe, and it stared at us this year and last from the drowned flood plains of the Mississippi and the fires and wreckage of the Los Angeles earthquake. If one phrase sums it up, it is 'design with nature' - the title of one of the most influential contemporary books on landscape design, written by Ian McHarg in 1969. Acts of man may have come to rival Acts of God, but if we properly understand the workings of the natural world, McHarg argued, we are relieved of the awful requirement to be the 'architects of God'. Our aim must be to co-operate, intelligently and sympathetically, with nature, treading lightly on the world.

Design with nature, for instance, might involve not building towns and cities on seismic fault lines. It might mean not attempting to impound the Mississippi behind ever higher levees and concrete barriers, increasing the scale of the eventual disaster. It would certainly mean aborting the absurd World Bank-backed plan to replicate the embankments of the Mississippi in Bangladesh, ignoring 'softer', traditional methods of flood prevention. It would probably mean a fundamental rethink of the way we plan and build settlements in the West.

Most of all, however, design with nature is an attitude of mind and one that those seeking to make money from insurance would do well to cultivate. Wherever the courts ultimately lay the blame, the conclusion is irresistible: Lloyd's, its syndicates and its Names were caught on the hop by the man-made disasters of the 1980s because they had the wrong attitude. Most of them were probably too busy making money to worry about the state of the planet. Most of them no doubt think roads protesters are yobbos and the green movement barmy. These are prejudices they almost certainly share with much of Britain's Establishment, and it helps to account for the slide of the environment down the political agenda. The audiences of Sophocles or Euripides understood their metaphysics - if not their law - much better. They knew that you ignore nature at your peril - it will generally have the last word.

(Photograph omitted)