Insurance giants seek action to help developing world adapt to climate change
Representatives ofmore than 100 leading international insurance companies are calling
on governments worldwide to harness risk management techniques and
insurance expertise to help the developing world adapt to climate
change.
The United Nations Environment Programme’s Financial Initiative
(UNEP FI), in collaboration with three insurance initiatives - the
Geneva Association, the Munich Climate Insurance Initiative (MCII)
and ClimateWise - presented the statement aimed at world leaders
and negotiators of the United Nations Framework Convention on
Climate Change (UNFCCC) at a press conference held in Lloyd’s
of London.
The statement, issued on the eve of an international, low-carbon
investment conference convened by the UK government, will highlight
how governments can unlock significant potential to increase the
protection and reduce the vulnerability of developing world
populations and economies from natural disasters through better
risk management and by enabling insurance-type approaches.
It notes the recent floods in Pakistan, China and Niger are a
timely reminder that the world must adapt to become more resilient
to the long-lasting and significant changes in climatic conditions
being experienced across the world.
These changes are likely to have the most damaging impacts on
the developing world, where even small economic losses can have
long-term effects on development, and where human health is
generally less robust.
Andrew Torrance, Chairman of
target=”_blank”>ClimateWise (a global collaboration of leading
insurers focused on reducing the risks of climate change launched
in 2007 by HRH The Prince of Wales), commented: “With climatic
disasters inflicting more and more damage, the increasing reliance
of governments on foreign aid alone is unsustainable.”
He added, “As the global climate continues to warm, we have to
find new ways to protect people and economies from the impacts of
extreme weather, particularly those who are most vulnerable.
Insurers have much to offer, but this potential can only be
leveraged through a partnership approach with governments. With
over 100 of the world’s leading insurers standing ready to engage,
the opportunity for partnership building is immense.”
In the past three decades, direct
global economic losses for all types of natural catastrophes have
averaged US$90 billion per year, with 78% of those natural
catastrophes being weather-related. Meanwhile, 85% of deaths
associated with all natural catastrophes over that timescale have
occurred in developing countries (Munich Re,
2010).
The four groups assert that enormous
potential can be derived from a partnership-based approach to
tackling the climatic risks faced by people and governments around
the world. Indeed, several communities affected by climate change
are already benefiting from projects that improve risk management
and feature insurance elements.
Over 4500 Mongolian herders covered by a public-private
index-insurance scheme are currently receiving indemnity payments
totalling around US$1.4 million for cattle mortality losses caused
by a particularly harsh winter.
And in September 2008, the Caribbean Catastrophe Risk Insurance
Facility (CCRIF) - a public-private partnership - paid US$6.3
million to the Turks and Caicos Islands after Grand Turk was hit by
Hurricane Ike.
The insurance industry can support adaptation efforts by applying
its expertise in risk management, by helping to incentivise loss
reduction mechanisms, by developing new insurance products and by
raising awareness among the many stakeholders of the insurance
industry, including governments and climate change negotiators.
The statement underscores the view that risk management
mechanisms are currently falling considerably short of their
potential in delivering resilience benefits to the developing
world. The insurance initiatives are therefore calling on
governments to:
• Implement risk reduction measures
already agreed at the 2005 World Conference on Disaster
Reduction
• Provide a suitable enabling
environment, including economic and regulatory frameworks, for risk
management and insurance to function at all levels of society
• Invest in reliable risk
exposure data and making it freely available to the public
• Act on lessons learned about
the benefits of regional public-private partnerships and
micro-insurance schemes which reduce losses for climatic risks
Patrick M. Liedtke, Secretary General and Managing Director of
The target=”_blank”>Geneva Association, a leading international
insurance economics “think tank” on insurance and risk management
issues, said: “The core principle of risk management and loss
prevention is that in most cases ‘prevention is better than cure’.
If governments, especially in the developing world, can implement
robust risk management and loss reduction measures then a
significant amount of both human suffering and economic loss could
be prevented.”
Today’s statement calls on governments to formally recognise the
potential role for insurance in the United Nations climate change
negotiations, and to open channels for dialogue at a national level
so that progress can be made immediately.
“There is now an opportunity, given
the current international negotiations under the UNFCCC, to firmly
anchor insurance expertise and components into any global
adaptation mechanism under the international climate-change
regime.”
Summing up, Achim Steiner, UN Under-Secretary-General and
Director, said: “The insurance industry is making it clear: it
has the expertise and the creative solutions to assist vulnerable
countries and communities manage the risks of climate change. But
it is a partnership that works both ways.”
“Governments need to act on this opportunity and harness this
reservoir of risk assessment skills. Secondly, the insurance
industry needs a fighting chance of success. In other words
governments need to back big cuts in emissions in line with the
scientific reality,” he added.
Source: www.genevaassociation.org
