Climate Change: Impacts on Insurers and How They Can Help With Adaptation and Mitigation

Abstract

Climate change is already affecting the global insurance industry. These changes are often seen as being negative, although opportunities also exist. Other areas of insurance coverage may also be affected in addition to property damage. The potential for third-party liability claims from climate change is less well understood but has even greater potential to affect the industry. Financial assets held to meet claims and provide a capital buffer may also be affected. Therefore the balance sheet of an insurer may be damaged from all sides. Insurers cannot force policyholders to mitigate CO2 emissions, but they can give them a choice and a number of them are already offering such policies. They can also take steps to reduce their own carbon emissions. Insurance is adaptation; there are a surprisingly large number of small to medium companies that do not have catastrophe cover, so increasing insurance penetration of these markets would be an adaptive measure. Insurers will continue to lobby governments for appropriate weather defences to keep areas insurable for as long as possible. Non-traditional forms of insurance are available (such as those based on weather indices with parametric triggers) and it may be possible to continue to offer these for longer than traditional insurance. They do bring basics risk with them, and therefore possibly reputational risk to the industry. Insurers can only pool risk; we cannot insure our way out of this problem, but we can help to spread the impacts where possible. The Geneva Papers (2008) 33, 140–146. doi:10.1057/palgrave.gpp.2510154

Modelo conceitual para avaliação de práticas e estratégias climáticas: resultados de sua aplicação nos setores automotivo e de papel e celulose no Brasil

“…São exercidas por vários tipos de atores, tais como consumidores, fornecedores, comunidades, organizações não governamentais (ONGs), governos e empregados (Hoffman, 2000). Mais recentemente, um novo grupo de stakeholders começou a exercer pressão: os bancos e as seguradoras (Esty e Winston, 2006;Maynard, 2008). A atuação desse novo grupo é significativa porque, como disseram Esty e Winston (2006:9), "…when the financial services industry, which focuses like a laser on return on investments, starts worrying about the environment, you know something big is happening".…”

Analysis of Nigerian insurers’ perceptions of climate change

“…Insurance is regarded as an adaptation measure, however, in the light of climate change, insurers may decide to leave their premiums and coverage unchanged or choose to adapt by revising their terms and conditions (Maynard, 2008). Globally, it has been observed that the costs of weather-related natural disasters are rising and there is a decline in the capacity of the insurance industry to absorb these (Mills, 2005).…”

“…Section five concludes the discussion and findings of the study. Maynard (2008) asserted that the insurance industry worldwide is already being negatively affected by climate change, although this situation also offers business opportunities. Climaterelated risks have been categorised into social, environmental and economic risks.…”

What Role for “Long-term Insurance” in Adaptation? An Analysis of the Prospects for and Pricing of Multi-year Insurance Contracts

“…Previous authors have suggested that insurance can be a powerful tool in this respect as the price and availability of insurance communicates a signal of the level of risk to the insured (e.g. Geneva Association, 2009;Herweijer et al 2009;Maynard, 2008;Ward et al 2008). In principle this should encourage the insured to take costeffective measures to reduce risk.…”