Insurance Industry Perspectives Tackling Loss & Damage from Climate Change Insurance Industry Perspectives Tackling Loss & Damage from Climate Change

Oceans Day at Durban Managing Risks in the World's Coasts: Perspectives from the Insurance Industry by Dr. Koko Warner Executive Director Munich Climate Insurance Initiative Hosted at UN University

My family has been living in this place for more than 100 years & I work for my daily wages, like my father & grandfather. When hurricanes come, they destroy so much. Tourists stay away and we don´t get work. It seems like we are getting more hurricanes some years…I do not know what to expect or how to deal with it. Our community needs help to reduce risks we face…to ensure our safety in the future.

In some years the storms are bad. I suffer a lot from flooding on my land. Today we are just getting by. Every time my crops are destroyed by a disaster, I have to go into debt—we need help to reduce the risks in our region. If my village had some kind of safety net…we could better adapt to the effects of too much rain and wind.

Introduction 5 In the lead-up to Cancun, four insurance related initiatives representing 100 of the world´s largest insurance companies launched a joint statement on "Adaptation to Climate Change in Developing Countries“, committing themselves to support adaptation efforts in developing countries.

Introduction 6 We think it is Necessary to enhance adaptation by addressing loss and damage. Insurance tools linked with disaster risk reduction have the potential to make adaptation efforts more effective, and save governments money. Time to act now. The UNFCCC process can catalyze activities to help governments get ahead of the curve by harnessing ex ante risk management tools to manage the devastating effects of weather-related disasters.

Insurance data and scientific studies indicate the weather extremes are increasing in frequency and magnitude “… Here we show that human-induced increases in greenhouse gases have contributed to the observed intensification of heavy precipitation events found over approximately two-thirds of data-covered parts of Northern Hemisphere land areas...Changes in extreme precipitation projected by models and thus the impacts of future changes in extreme precipitation, may be underestimated because models seem to underestimate the observed increase in heavy precipitation with warming”. Natural catastrophes worldwide, 1980 – 2010 Number of events by peril with trend Meteorological events (Storm) Hydrological events (Flood, mass movement) Geophysical events (Earthquake, tsunami, volcanic eruption) Number of events © 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at January 2011

Effects of weather-related disasters on the Caribbean Region The Caribbean suffers an average of one major hurricane and numerous tropical storms per annum (Carby 2011) For countries affected by a disaster, tourist arrivals fall in that year by 2.8%. There is also a 13% reduction in growth rates which takes 3 years to recover to pre-disaster levels (Crowards, 2005) CCRIF (2010) estimates that losses in agriculture, housing and tourism could increase by 1% to 3% of GDP by 2050; 90% of which would be caused by hurricane damage Since 1981 for Belize, Grenada, Jamaica and St. Lucia, Hurricane/Flood damage amounted to US$5 billion, affecting 1.5 million persons

The need to act 9 Most developing countries are located in regions affected most by global warming Due to lack of money they cannot finance adaptation measures themselves There is no insurance market, which could cover at least part of the risks After natural catastrophes the whole economy can be thrown back for many years

Our commitment to reducing loss & damage 10 Over the course of the SBI Work Program, we commit to bring to Parties the experiences, lessons learned through both mistakes and successes with different risk management, risk reduction, and risk transfer approaches and tools. We will share with Parties technical standards and requirements of the ideas they propose to manage loss and damage. Global Insurance Industry Statement on Adaptation to Climate Change in Developing Countries, 2010.

What we could achieve with the UNFCCC process for adaptation 11 Help create a blueprint for adaptation information support systems, with other relevant stakeholders in the UN family and expert communities: standards around weather observation, data and information collection, recommendations to improve risk management Support analysis of ways to strengthen risk management capacity at the national and sub-national level, such as ways to help institutions create and enforce appropriate loss avoidance measures like building and safety codes Help Parties design and implement demonstration and implementation activities around risk management, risk reduction, and risk transfer- If Parties articulate their needs and invite stakeholder input through the UNFCCC process

In practical terms, we call on governments to 12 Global Insurance Industry Statement on Adaptation to Climate Change in Developing Countries, 2010.

In practical terms, we call on the UNFCCC process to 13

Reward for change  By working with the SBI Work Program on Loss & Damage and with relevant stake- holders, governments can leverage this potential, increase protection of individuals and the economy, reduce weather impacts and foster sustainable development.  In co-operation with regional, national and international actors insurance solutions have the potential to provide tangible results for the most vulnerable countries and soften the blow of climate-related disasters.  By working with the SBI Work Program on Loss & Damage and with relevant stake- holders, governments can leverage this potential, increase protection of individuals and the economy, reduce weather impacts and foster sustainable development.  In co-operation with regional, national and international actors insurance solutions have the potential to provide tangible results for the most vulnerable countries and soften the blow of climate-related disasters. 14

Thank you. Dr. Koko Warner