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A preliminary assessment of the impact of climate change on non-life insurance demand in the BRICS economies

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  • Nicola Ranger
  • Swenja Surminski
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    Abstract

    Over the past decade, growth in insurance demand in the BRICS economies has been a key driver of global non-life premium growth. Current forecasts suggest that these markets will continue to be areas of significant growth over the coming decade. We consider how climate change may influence these trends in the period to 2030. We suggest five pathways of influence: economic growth; willingness to pay for insurance; public policy and regulation; the insurability of natural catastrophe risks; and new opportunities associated with adaptation and greenhouse gas mitigation. We conclude that, with the exception of public policy and regulation, the influence of climate change on insurance demand to 2030 is likely to be small when compared with the expected growth due to rising incomes. The scale of the impacts and their direction depend to some extent on (re)insurer responses to the challenges of climate change. We outline five actions that could pave the way for future opportunities.

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    File URL: http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/02/WP63_climate-change-non-life-insurance.pdf
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    Bibliographic Info

    Paper provided by Grantham Research Institute on Climate Change and the Environment in its series Grantham Research Institute on Climate Change and the Environment Working Papers with number 63.

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    Date of creation: Sep 2011
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    Handle: RePEc:lsg:lsgwps:wp63

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    1. Martin F. Grace & Robert W. Klein, 2009. "The Perfect Storm: Hurricanes, Insurance, and Regulation," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 12(1), pages 81-124, 03.
    2. Evan Mills, 2007. "Synergisms between climate change mitigation and adaptation: an insurance perspective," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(5), pages 809-842, June.
    3. Hertel, Thomas & Burke, Marshall & Lobell, David, 2010. "The Poverty Implications of Climate-Induced Crop Yield Changes by 2030," GTAP Working Papers 3196, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Celine Herweijer & Nicola Ranger & Robert E T Ward, 2009. "Adaptation to Climate Change: Threats and Opportunities for the Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 34(3), pages 360-380, July.
    5. Szpiro, George G., 1988. "Insurance, risk aversion and demand for insurance," Journal of Banking & Finance, Elsevier, vol. 6(1, Supple), pages 1-125, January.
    6. W. J. Wouter Botzen & Jeroen C.J.M. van den Bergh, 2009. "Bounded Rationality, Climate Risks, and Insurance: Is There a Market for Natural Disasters?," Land Economics, University of Wisconsin Press, vol. 85(2), pages 265-278.
    7. Stephanie Hussels & Damian Ward & Ralf Zurbruegg, 2005. "Stimulating the Demand for Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(2), pages 257-278, 09.
    8. J. David Cummins & Bertrand Venard, 2008. "Insurance Market Dynamics: Between Global Developments and Local Contingencies," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 11(2), pages 295-326, 09.
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