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

E Carina H Keskitalo,Gregor Vulturius,Peter Scholten

doi:10.1007/s11069-013-0912-7

Abstract

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.

Highlights

Introduction and aimAs mitigation—the reduction in emissions—will not be sufficient to hinder the climate change caused by currently and previously emitted greenhouse gases (GHG), the expected scale of that change will pose major challenges for adaptation throughout Europe (IPCC 2007)
‘‘flooding ... [is] the biggest adaptation risk that we face in the UK ... most of [what] I can talk about, in terms of what the insurance industry does, is flooding’’ (ABI, interview)
While commercial insurance has not been a focal issue in adaptation policies in any of these countries, the potential of climate-related risks may come to play a large role—even if perceived in terms of risk for extreme events rather than necessarily in relation to climate change in general

Summary

Introduction

Introduction and aimAs mitigation—the reduction in emissions—will not be sufficient to hinder the climate change caused by currently and previously emitted greenhouse gases (GHG), the expected scale of that change will pose major challenges for adaptation throughout Europe (IPCC 2007). Flooding has often been singled out as a climate risk due to its large impact on. Depending on future socioeconomic development and future GHG emissions, it is predicted that climate change may as much as double damage from river floods, with costs reaching € 20 billion between 2011 and 2020 (Feyen and Watkiss 2011). These vulnerabilities correlate with increased infrastructure development in lowland areas as a result of urbanization, among other trends (Aerts and Botzen 2011; Kreibich et al 2005). Little research has been done to date on integrating the private sector in adaptation, for the recently developed state programs for adaptation have so far focused on the public sector (Smit and Wandel 2006; IPCC 2007; Keskitalo 2010)

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