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Adaptation to Climate Change: Threats and Opportunities for the Insurance Industry

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  • Celine Herweijer

    (PricewaterhouseCoopers LLP, Sustainability and Climate Change Risk Advisory, 1 Embankment Place, London WC2N 6RH, U.K.)

  • Nicola Ranger

    (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, U.K.)

  • Robert E T Ward

    (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, U.K.)

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    Abstract

    In this paper we explore why adaptation to climate change is such a critical issue to the commercial success of the private insurance industry. We highlight both the risks arising from inadequate adaptation to the impacts of climate change, and the opportunities presented by playing a role in the global response to adaptation. We demonstrate that the success, or not, of adaptation to the impacts of climate change will be relevant to both the underwriting and investment operations of (re)insurance companies. In the short term, climate change will affect underwriting practices by necessitating risk quantification approaches that include a forward-looking view of risk that is not purely grounded in historical experience. In the longer term, insufficient adaptation in areas of rising risk could threaten the concept of insurability itself, by limiting the availability and affordability of private insurance coverage. Furthermore, we demonstrate that activities that incentivise and enable adaptation not only give rise to commercial opportunities and reputational reward, but are increasingly necessary for the sustainability of the industry. The Geneva Papers (2009) 34, 360–380. doi:10.1057/gpp.2009.13

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Issues and Practice.

    Volume (Year): 34 (2009)
    Issue (Month): 3 (July)
    Pages: 360-380

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    Handle: RePEc:pal:gpprii:v:34:y:2009:i:3:p:360-380

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    Web page: http://www.palgrave-journals.com/

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    Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
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    Cited by:
    1. Nicola Ranger & Andrew Williamson, 2011. "Forecasting non-life insurance demand in the BRICS economies: a preliminary evaluation of the impacts of income and climate change," Grantham Research Institute on Climate Change and the Environment Working Papers 61, Grantham Research Institute on Climate Change and the Environment.
    2. David I. Stern & Frank Jotzo & Leo Dobes, 2013. "The Economics of Global Climate Change: A Historical Literature Review," CCEP Working Papers 1307, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
    3. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
    4. Susannah Fisher & Swenja Surminski, 2012. "The roles of public and private actors in the governance of adaptation: the case of agricultural insurance in India," Grantham Research Institute on Climate Change and the Environment Working Papers 89, Grantham Research Institute on Climate Change and the Environment.
    5. Susannah Fisher & Swenja Surminski, 2012. "The roles of public and private actors in the governance of adaptation: the case of agricultural insurance in India," LSE Research Online Documents on Economics 46400, London School of Economics and Political Science, LSE Library.
    6. Nicola Ranger & Swenja Surminski, 2011. "A preliminary assessment of the impact of climate change on non-life insurance demand in the BRICS economies," Grantham Research Institute on Climate Change and the Environment Working Papers 63, Grantham Research Institute on Climate Change and the Environment.

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