insurer perspectives on climate change adaptation results of a global survey – a sneak preview...
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Insurer perspectives on climate change adaptation
Results of a global survey – A sneak preview
UNEP FI December 2011
UNEP FI’s approach to insurance and climate change adaptation
Insurance industry
• How is the insurance industry contributing to the climate resilience of economies and communities through its risk management and risk transfer products and services? What are examples of effective solutions and how can these brought to scale?
National and local governments
• What actions by national and local governments are needed by the insurance industry to develop and scale up risk management and risk transfer products and services for vulnerable communities?
Intergovernmental process
• How can the intergovernmental process – specifically the next international climate change regime under the UNFCCC – mobilise the insurance industry to develop, implement and scale up risk management and risk transfer solutions for vulnerable communities, particularly those in developing countries?
Highest climate risk in the past 20 years in developing countries
Future regional vulnerability of human populations to climate change
© McGill University
Source: Samson, J. et al. (2011) Geographic disparities and moral hazards in the predicted impacts of climate change on human populations. Global Ecology and Biogeography.
Regions with a high CDVI are expected to be most negatively impacted by climate change.
The CDVI is based on ecological and demographic models .
The insured and uninsured world
Overview of property insurance premium per capita
Highly insured countries
(> USD 1,000 )
Well insured countries
(USD 101 - 1,000 )
Basically insured countries
(USD 11- 100)
Inadequately insured countries
(< USD 10)
Insurance groups:
Source: Munich Re, property insurance premium (non-life including health), per capita in 2008
© 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at May 2011
Survey Background
• 67 participants
• 24 countries
• 56 companies
• 33 from developed countries; 32 developing countries
Question 1 - climate change?
Insurance Belief in Climate Change
95%
1% 4%
Yes
No
N/A
Top Influential Factors for Believing in Climate Change
61
38
30
27
19
16
0 10 20 30 40 50 60 70
Scientific and Climate Evidence
Insurance Claims Data
Insurance industry intiatives
Media
International policy and regulation
National Policy and Regulations
Infl
uen
tial
fac
tors
Number of Respondents
Question 3 – insurer action: processes
Response to Climate Change in the Past 5 Years
13
18
18
22
26
26
26
31
31
34
35
0 5 10 15 20 25 30 35 40
Insurance-linked securities
Traditional reinsurance and retrocession
Claims management
Loss reduction measures
Risk survey
Risk mapping
Product development
Risk research
Loss prevention measures
Risk quantification and modelling
Risk underwriting
Lin
es
of
ins
ura
nc
e
Number of Respondents
Credit and Surety Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Aviation, Marine and Transport Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Casualty and Liability Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Financial Lines Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Life Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Question 2 – relevance of climate change?
Motor Insurance
0.0
0.5
1.0
1.5
2.0
2.5
now 10 years 10 years later
Property Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Engineering Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Agroforestry Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Accident and Health Insurance
0.0
0.5
1.0
1.5
2.0
2.5
3.0
now 10 years 10 years later
Average Relevance of Climate Change to Risk Management and Transfer Activities Over Time
0.0
0.5
1.0
1.5
2.0
2.5
Now 10 years 10 years later
Rel
evan
ce
Types of Products Offered Related to Climate Change
48
38
32
32
29
26
21
20
20
18
14
5
4
4
5
6
1
13
3
1
0 5 10 15 20 25 30 35 40 45 50
Property
Motor
Engineering
Transport
Accident and Health
Casualty and Liability
Financial Lines
Agroforestry
Life
Credit and Surety
Pro
du
cts
Number of Respondents
Index
Indemnity
Question 4 – insurer action: products
Question 7 – making it real.
Benefit per Risk Management Solution
2.46 2.46 2.34 2.31 2.29 2.29 2.24 2.10
0.00.20.40.60.81.01.21.41.61.82.02.22.42.6
Land use Flood Zoning Conservation Infrastructure Drainage Disaster Irrigation
Risk Management Solution
Be
ne
fit
Question 7 – making it real.
Cost-effectiveness per Risk Management Solution
2.49 2.412.20 2.19 2.12 1.98 1.93 1.86
0.00.20.40.60.81.01.21.41.61.82.02.22.42.6
Flood Drainage Conservation Infrastructure Irrigation Land use Zoning Disaster
Risk Management Solution
Co
st E
ffec
tive
nes
s
Degree of Effectiveness per Government Action at the Local Level
2.47 2.40 2.36
1.40 1.28 1.19
0.00.20.40.60.81.01.21.41.61.82.02.22.42.6
Drainage Flood Landuse Subsidies InsuranceRegulations
Disclosure
Government Action
Deg
ree
of
Eff
ecti
ven
ess
Question 8 – to do´s for government - locally
Question 8 – to do´s for government - nationally
Degree of Effectiveness per Government Action at the National Level
2.47 2.45 2.402.02 1.98 1.91
0.00.20.40.60.81.01.21.41.61.82.02.22.42.6
Disaster Infrastructure ClimatePolicyDialogue
InsuranceRegulations
Disclosure Subsidies
Government Action
Deg
ree
of
Eff
ecti
ven
ess
Degree of Effectiveness per Government Action at a International Level
2.50 2.44 2.38
1.56 1.44 1.33
0.00.20.40.60.81.01.21.41.61.82.02.22.42.6
Weather Research Models Subsidies Drainage Irrigation
Government Action
De
gre
e o
f e
ffe
cti
ve
ne
ss
Question 8 - to do´s for government - internationally
Preliminary conclusions
• Insurers are already adapting to climate change, across lines of business and internal processes
• Insurers are already helping societies and economies adapt to climate change
• These activities can be expanded and up-scaled through public-private collaboration
• There are ideal roles for local, national and international government bodies to play