Insurance in a Climate of Change

Mills, Evan

doi:10.1126/science.1112121

Cited by 310 publications

(208 citation statements)

References 18 publications

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“…The industry's ''core'' business activities, risk transfer, risk assessment and incentivizing risk-reducing activities have been underlined as key factors in this respect (Mills 2005). Potential climate change-induced alterations in the return period of low probability, extreme events and the persistent scientific uncertainty that surrounds them make the insurance industry itself vulnerable through increased damage to its policy holders and losses of its own assets (Dlugolecki 2008;Maynard 2008).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…The insurance sector constitutes a particularly important case as it offers other parts of society a service for appropriately identifying, assessing and covering climate changeinduced risks: It forms part of a ''broader public-private patchwork for spreading risks across time, over large geographical areas, and among diverse social and commercial communicates'' (Mills 2005(Mills , 1040. While the commercial insurance industry has been one of the first in the private sector to discuss adaptation to climate change (see, e.g., Munich 1973), risk analysis and underlying loss reduction strategies need to be improved to take into account the estimated frequency of extreme weather events and higher risks.…”

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confidence: 99%

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Adaptation to climate change in the insurance sector: examples from the UK, Germany and the Netherlands

2013

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Adaptation to climate change, particularly flood risks, may come to pose large challenges in the future and will require cooperation among a range of stakeholders. However, there presently exists little research especially on the integration of the private sector in adaptation. In particular, recently developed state programs for adaptation have so far been focused on the public sector. Insurance providers may have much to contribute as they offer other parts of society services to appropriately identify, assess and reduce the financial impacts of climate change-induced risks. This study aims to explore how the institutional distribution of responsibility for flood risk is being renegotiated within the UK, Germany and Netherlands. Examining how the insurance industry and the public sector can coordinate their actions to promote climate change adaptation, the study discusses how layered natural hazard insurance systems may result from attempts to deal with increasing risks due to increasing incidences of extreme events and climate change. It illustrates that concerns over the risks from extreme natural events have prompted re-assessments of the current systems, with insurance requiring long-term legislative frameworks that defines the objectives and responsibilities of insurers and the different political authorities.

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Section: Theoretical Frameworkmentioning

confidence: 99%

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confidence: 99%

Adaptation to climate change in the insurance sector: examples from the UK, Germany and the Netherlands

2013

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“…The economic costs of storms and hurricanes are mostly borne by insurance companies, while the costs of other types of natural disaster costs are generally born by the public sector or by individuals (Mills, 2005). Insured property losses have risen dramatically over the last several years.…”

Section: Introductionmentioning

confidence: 99%

“…Insured property losses have risen dramatically over the last several years. Typically there has been a dramatic underestimation of potential loss resulting from natural hazards on the part of insurance companies, resulting in a sudden rise in claims and subsequent increases in policy costs (Mills, 2005).…”

Section: Introductionmentioning

confidence: 99%

Atlantic hurricanes—Testing impacts of local SSTs, ENSO, stratospheric QBO—Implications for global warming

Arpe

Leroy

2009

Quaternary International

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Processes affecting hurricane development over the North Atlantic like the El Niño Southern Oscillation (ENSO), the stratospheric Quasi-Biennial Oscillation (QBO) and Sea Surface Temperatures (SSTs) are discussed. Global coupled climate model simulations cannot answer directly the question on enhancement of hurricane activities (or its absence) under increased greenhouse gas concentrations because of their too coarse resolution. Therefore large-scale quantities that affect hurricane formation are investigated in a future warmer climate.More frequent or more intense hurricanes are expected from an increase in the local SST, from more latent heat flux from the ocean to the atmosphere, from more westerly winds in the tropical stratosphere that reduces the occurrence of strong easterly phases of the QBO and from a more moist-unstable stratification of the atmosphere. However, a stronger vertical wind shear similar to the difference between El Niño and La Niña events suggests fewer hurricanes in the northern Atlantic. Also a more dry-stable atmosphere would lead to fewer hurricanes. Of the various forcing factors, the impact of wind shear appears to be more decisive, i.e. with a strong wind shear over the tropical Atlantic like during El Niño events strong hurricanes hardly happen while impacts from SSTs over the tropical Atlantic are less significant. As there are some factors favouring an increase of hurricane activity in a future climate and others favouring a decrease, it remains so far difficult to estimate their joint effect and to suggest any decisive trend. The area of hurricane development is limited among others by an increase of vertical wind shear towards the north and south from a minimum at 5-10˚N. This wind shear pattern does not change in a future climate and has the potential of superseding impacts from ocean warming. A need for very long time series for obtaining robust results becomes obvious. Here at least 50 years of data were used.

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“…The insurance industry itself was active early on (Mills 2005;Mills 2012), both within individual companies and collectively (Geneva Association 2009). Think-tanks were established and climate related insurance products have been developed (Surminski et al 2016).…”

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confidence: 99%

All hands on deck: polycentric governance for climate change insurance

2016

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In this essay, we argue that it is possible to significantly complement and improve our collective response to climate change by harnessing the combined capacities of key actors across the public and private sector. We apply the concepts of liability, market mechanisms, preferential market access, and polycentric governance toward a new type of climate change insurance for CO 2 . The quest to apply insurance principles to climate change dates back multiple decades. But ideas for employing the industry's ability to help avoid or minimize and, if necessary, compensate for uncertain costs in the future at scale, across national boundaries, and as part of a broader regime, seem to be lacking. We propose an approach that complements and combines ongoing efforts within a polycentric governance structure to reduce CO 2 emissions, increase resilience to and compensate damages from climate change on a global scale.

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Insurance in a Climate of Change

Cited by 310 publications

References 18 publications

Adaptation to climate change in the insurance sector: examples from the UK, Germany and the Netherlands

Adaptation to climate change in the insurance sector: examples from the UK, Germany and the Netherlands

Atlantic hurricanes—Testing impacts of local SSTs, ENSO, stratospheric QBO—Implications for global warming

All hands on deck: polycentric governance for climate change insurance

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