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Insurance Industry Perspectives
Tackling Loss & Damage from Climate Change
Oceans Day at Durban
Managing Risks in the World's Coasts: Perspectives from the Insurance Industry
by Dr. Koko Warner Executive Director
Munich Climate Insurance InitiativeHosted at UN University
My family has been living in this place for more than 100 years & I work for my daily wages, like my father & grandfather.
When hurricanes come, they destroy so much. Tourists stay away and we don´t get work. It seems like we are getting more hurricanes some years…I do not know what to expect or how to deal with it.
Our community needs help to reduce risks we face…to ensure our safety in the future.
In some years the storms are bad. I suffer a lot from flooding on my land. Today we are just getting by.
Every time my crops are destroyed by a disaster, I have to go into debt—we need help to reduce the risks in our region.
If my village had some kind of safety net…we could better adapt to the effects of too much rain and wind.
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Introduction
In the lead-up to Cancun, four insurance related initiatives representing 100 of the world´s largest insurance companies launched a joint statement on "Adaptation to Climate Change in Developing Countries“, committing themselves to support adaptation efforts in developing countries.
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Introduction
We think it is
• Necessary to enhance adaptation by addressing loss and damage. Insurance tools linked with disaster risk reduction have the potential to make adaptation efforts more effective, and save governments money.
• Time to act now. The UNFCCC process can catalyze activities to help governments get ahead of the curve by harnessing ex ante risk management tools to manage the devastating effects of weather-related disasters.
Insurance data and scientific studies indicate the weather extremes are increasing in frequency and magnitude
“… Here we show that human-induced increases in greenhouse gases have contributed to the observed intensification of heavy precipitation events found over approximately two-thirds of data-covered parts of Northern Hemisphere land areas. ..Changes in extreme precipitation projected by models and thus the impacts of future changes in extreme precipitation, may be underestimated because models seem to underestimate the observed increase in heavy precipitation with warming”.50
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1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Natural catastrophes worldwide, 1980 – 2010Number of events by peril with trend
Meteorological events(Storm)
Hydrological events(Flood, mass movement)
Geophysical events(Earthquake, tsunami, volcanic eruption)
Num
ber o
f eve
nts
© 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at January 2011
Effects of weather-related disasters on the Caribbean Region
• The Caribbean suffers an average of one major hurricane and numerous tropical storms per annum (Carby 2011)
• For countries affected by a disaster, tourist arrivals fall in that year by 2.8%. There is also a 13% reduction in growth rates which takes 3 years to recover to pre-disaster levels (Crowards, 2005)
• CCRIF (2010) estimates that losses in agriculture, housing and tourism could increase by 1% to 3% of GDP by 2050; 90% of which would be caused by hurricane damage
• Since 1981 for Belize, Grenada, Jamaica and St. Lucia, Hurricane/Flood damage amounted to US$5 billion, affecting 1.5 million persons
Our commitment to reducing loss & damage
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• Over the course of the SBI Work Program, we commit to bring to Parties the experiences, lessons learned through both mistakes and successes with different risk management, risk reduction, and risk transfer approaches and tools.
• We will share with Parties technical standards and requirements of the ideas they propose to manage loss and damage.
Global Insurance Industry Statement on Adaptation to Climate Change in Developing Countries, 2010.
What we could achieve with the UNFCCC process for adaptation
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• Help create a blueprint for adaptation information support systems, with other relevant stakeholders in the UN family and expert communities: standards around weather observation, data and information collection, recommendations to improve risk management
• Support analysis of ways to strengthen risk management capacity at the national and sub-national level, such as ways to help institutions create and enforce appropriate loss avoidance measures like building and safety codes
• Help Parties design and implement demonstration and implementation activities around risk management, risk reduction, and risk transfer- If Parties articulate their needs and invite stakeholder input through the UNFCCC process
In practical terms, we call on governments to
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Act
Enable
Inform
• Act on lessons learned about regional public-private partnerships
• Some governments will need support from international community for ex ante risk management steps.
• Engage in risk reduction activities by taking action on Hyogo FrameworkProvide enabling environment for risk management, insurance, governance, etc.
• Get best sources of information about managing, reducing & transferring risks.
• Invest in systematic & reliable risk exposure data, which have multiple adaptation applications
Global Insurance Industry Statement on Adaptation to Climate Change in Developing Countries, 2010.
In practical terms, we call on the UNFCCC process to
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Act
Enable
Inform
• Catalyze investments & implementation to address weather-related disasters in a post-2012 UNFCCC climate agreement
• Design measures to avoid loss & damage, & transfer risk which cannot be avoided
• Risk reduction as criteria for participation in insurance schemes
• Involve risk management professionals in SBI Work Program: Share experiences, link risk avoidance & risk transfer, align investment with adaptation, & activities to assess, aggregate risk
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Reward for change
By working with the SBI Work Program on Loss & Damage and with relevant stake- holders, governments can leverage this potential, increase protection of individuals and the economy, reduce weather impacts and foster sustainable development. In co-operation with regional, national and international actors insurance solutions have the potential to provide tangible results for the most vulnerable countries and soften the blow of climate-related disasters.
