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Insurance and climate risk

Insurance and climate risk. How to make insurance part of adaptation to climate change. Max Linsen DG CLIMA Adaptation Unit Max.linsen@ec.europa.eu 0032 229 59824. Adaptation. EU Adaptation Strategy. Promote action by all M ember States

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Insurance and climate risk

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  1. Insurance and climaterisk How to makeinsurance part of adaptation to climate change Max Linsen DG CLIMA Adaptation Unit Max.linsen@ec.europa.eu 0032 229 59824

  2. Adaptation EU Adaptation Strategy • Promote action by all Member States • Encourage all MS to adoptadaptation strategies • Access to fundingto help thembuildresilience • Launchvoluntary adaptation initiative for cities and municipalities • Make EU-level action 'climate-proof' • Furtherintegrateclimate adaptation needsinto key vulnerablesectors: agriculture, fisheries, energy, • Make infrastructure more resilient • Integrateinsurancein disasterisk management • Make decision-making better informed • Address knowledge gaps through research • Climate-ADAPT web portal

  3. A figure for warming up PESETA III, JRC (2017) (to bepublished)

  4. IPCC, 2012

  5. Whatisinsurance to climate change? http://publications.jrc.ec.europa.eu/repository/handle/JRC98159

  6. In short: • Climate change influences riskpricing • Climate change introduces the far horizon • Consequences of climate change increase damages Risksshouldbeavoided!

  7. Externalstudy • Insurance of weather and climate-related disaster risk: Inventory and analysis of mechanisms to support damage prevention in the EU

  8. Studyset-up • How caninsuranceincentiviseriskreduction? • Under which conditions doesinsuranceworkwell? • How canweapply good practice all over the EU? • Coveringbothprivateproperty and agriculture

  9. Risk management objective • Depends on the expectations of governments, insured parties or insurers. • Solidarity • Achieve maximum coverage in order to evenly distribute risk. • Climate risk management • will increase risk awareness and provide incentives to increase resilience through adaptation measures.

  10. And how to measurethose • Coverage • signal of risk or promote risk management and preparedness; • absorb large losses (Solvency II requirements); • quick and certain compensation payments after a disaster event; • the affordability and availability of insurance policies / premiums.

  11. Some good practices • Government collaborates with insurers to control and distribute EU subsidies. • Insurers receive data on several factors (i.e. area, type of crops, yields) to develop more suitable insurance products.

  12. Some good practices • To be insured a farmer must meet certain pre-set conditions regarding their vulnerability to extreme events, setting vulnerability to an acceptable level. • Bonus-malus

  13. Main recommendations

  14. Minimum building standards, or build-back-better requirements • differentiated by risk levels can be required • standard element of insurance contracts • to gain coverage (with a focus on measures integrated into the building).

  15. Research with the aim of defining and quantifying resilience • to support risk awareness and reduction • focus on how insurance can enhance the economic resilience.

  16. Link access to wider agricultural sector subsidies (i.e. those relating to the common agricultural policy (CAP) or those offered at national level) to the purchase of sufficient insurance protection • in order to develop a tradition of being insured.

  17. Create a national focal point or authority for developing and maintaining a legal framework through which extreme weather risks can be managed via a combination of risk reduction and/or transfer. • Lay down the roles and responsibilities of all the stakeholders in a national platform, focal point or authority, in a clear and transparent framework.

  18. Recommend cities assess their vulnerability • coverage, including for municipal infrastructure and extreme weather events • reporting on how they use insurance as a mechanism for managing risks.

  19. Promote the use of insurance disaster loss data in the municipalities’ risk-assessment data. • (also applicable to agriculture?)

  20. Promote the active and collaborative sharing of risk, hazard and impact data across stakeholders • standardisation of metadata and the format of granular data • efficiently and transparently shared across stakeholders productively.

  21. Promote the use of community rating systems for setting premiums • Promote the spreading of risk by allowing cities to pool their insurance • Increase capacity building with regard to insurance and climate resilience

  22. The report • https://publications.europa.eu/en/publication-detail/-/publication/4f366956-a19e-11e7-b92d-01aa75ed71a1/language-en/format-PDF/source-47342488

  23. Evaluation of the adaptation strategy Online publicconsultationstarts in December! Checkout https://ec.europa.eu/info/consultations_en

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