Better Understanding Insurance Mechanism in Dealing with Climate Change Risk, with Special Reference to China

Abstract

Climate change risk has become an important challenge for global sustainable development. The insurance industry can play an important role in coping with the increasingly severe climate change risk. This paper first describes the increasing climate change risk and the difficulties of the insurance mechanism in dealing with it. Then this paper summarizes the international practice of using the insurance mechanism to deal with climate change risk from ten different aspects. Based on the summary of the role of the insurance mechanism in dealing with this risk in developing countries, this paper puts forward the main application areas for climate change risk insurance and discusses the policy implications of developing climate change risk insurance in China.

Comprehensive Understanding the Disaster-Causing Mechanism, Governance Dilemma and Targeted Countermeasures of Urban Pluvial Flooding in China

“…Many scholars have analyzed the spatial and temporal evolution characteristics of extreme precipitation or rainstorm in China and the causes of the changes [6,7,33,[38][39][40]. Studies have shown that the rainstorm events in the North China Plain are more random during the past few decades [10,15,16], with the maximum rainfall historically occurring much higher than the common heavy rainfall in the North China Plain [17].…”

“…World Meteorological Organization statistics show that from 1970 to 2009, there were 7870 hydro-meteorological-related disasters worldwide, causing a total number of 1.86 million deaths and USD 1.90 trillion in economic losses, of which rainstorms and floods accounted for 79% of the total number of disasters, with 56% of the deaths and 85% of the economic losses, respectively [7]. The increase in the frequency and severity of urban pluvial flooding disasters has posed a huge challenge to sustainable development and economic construction in countries around the world [8][9][10][11].…”

“…China is significantly influenced by monsoon, and urban pluvial flooding is concentrated from May to September [7,10]. Since the rapid development of urbanization after the implementation of China's reform and opening-up policy in 1978, urban pluvial flooding disasters are more serious, and the phenomena of "urban sea-viewing" have occurred repeatedly in major cities in China, especially in the eastern coastal cities [12].…”

Urban Inundation under Different Rainstorm Scenarios in Lin’an City, China

“…The spatial and temporal distributions, intensities, and frequencies of rainfall are changing because of global warming [ 1 ]. Rainfall is becoming more uneven and intense, and these variations in rainfall have aggravated the occurrence of urban inundation, soil erosion, and other hazards [ 2 , 3 ]. Meanwhile, the urban expansion in China is accelerating, increasing the impervious surface of the city, changing the urban hydrological process and increasing the possibility of urban inundation [ 4 , 5 , 6 ].…”

How to Understand the Role of Insurance Mechanism in a Global Pandemic?

“…In China, due to the COVID-19 epidemic, China's GDP fell 6.8% year-on-year in the first quarter of 2020, the first negative growth rate since 1992 and a new low growth rate in the 40 years of the implementation of reform and opening up since 1978 [4,5]. As an important member of the economy and society, the insurance mechanism participates in the specialization of division of labor in society and assumes the responsibility of managing risks and organizing loss compensation, thus determining that risk diversification and organizing loss compensation are the basic functions inherent in insurance [7]. The risk diversification function forms an insurance fund by collecting premiums to concentrate a large number of units in the same risk category, so that a small number of risk shocks will be covered [6].…”