Insurance Solutions in the Context of Climate-Change-Related Loss and Damage: Needs, Gaps and Roles of the UNFCCC in Addressing Loss and Damage

Abstract

The UNFCCC can foster long-term commitment to risk transfer in order to enable sustainable solutions and partnerships. A global approach to risk transfer, embedded in a coherent strategy to manage the negative impacts of climate change, can be a sustainable solution to parts of the loss and damage spectrum. An international climate-risk insurance facility will help better diversify risks of loss and damage from extreme weather events, lower the costs of managing these risks, and ensure more timely and targeted delivery of support when catastrophes strike. This could be part of a wider coordination function of a loss-and-damage mechanism, which could be operationalised through a series of regional risk-management platforms, including risk insurance pools, which could collaborate and coordinate on the management of loss and damage.11 See Decision 7/CP.17, para.'s 1-9; available at http://unfccc.int/files/meetings/durb an_nov_2011/decisions/application/pdf/cop17_loss_damage.pdf, last accessed 14 May 2013. 12 (ibid.:para. 2 and Annex 2). 13 (ibid.:para. 5).

Problematising loss and damage

“…The benefit of an insurance model over an ad hoc disaster response model is that insured beneficiaries enjoy a guaranteed right to post-disaster compensation, which is tied to contribution into an insurance mechanism. This reduces uncertainty, defines financial responsibilities and establishes resource transfer mechanisms (Warner et al, 2012a). Even after all of these measures are employed, an increasing part of the social contract that governments make with their citizens for dealing with risk includes planning for post-disaster response, and mobilising special funds in states of emergency.…”

“…Climate change negotiations in Doha in 2012 centred on the character of potential institutional mechanisms that would be nominated for Warsaw 2013. The character of these discussions focused on existing tools for dealing with environmental impacts that foreclose adaptation (Warner et al, 2012a). In general proposed approaches are envisioned as synergistic complementarities that treat loss and damage internally, respecting sovereignty and diverse national approaches, rather than as a matter of compensation from externally imposed stress for which liability can be assigned (UNFCCC SBI, 2012a; UNFCCC TP, 2012).…”