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Determinants of Insurance Companies Engagement in Climate Change Adaptation – A Cross Country Comparison

Isabel Seifert-Dähnn
Norwegian Institute of Water Research
Isabel Seifert-Dähnn
Norwegian Institute of Water Research
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Abstract

Economic losses of weather-related hazards are already high and expected to increase in the future (Paudel et al., 2015). Between 2000 and 2016 hydrological events, i.e. flooding caused 123 billion USD of overall losses, 36 billion were insured (Munich Re, 2017). Climate change are among the factors considered responsible for already observed increases in loss trends and probably also for future increases (Alfieri et al. 2016;). Adaptation is seen as one necessary management strategy to reduce and manage the risks of climate change (IPCC, 2014). Another indispensable mechanism in disaster risk management is risk transfer i.e. the spreading of losses in time and/or space and sharing them with third parties in exchange for a premium (Bouwer et al., 2014). This is often done by insurance schemes. There is a growing recognition about the large potential that insurance has in providing incentives for boosting adaptation and damage prevention (Bräuninger et al., 2011 . This article asks what are the potential benefits for insurers to get directly engaged in adaptation activities or support adaptation activities of their policy-holders or the public. The study is based upon a screened through academic and grey literature as well as available internet resources to identify examples of insurers engaged in adaptation, as well as suggestions about their possible involvement. Taking into account different flood adaptation measures and various framing conditions such as the flood insurance system, the design of products or market penetration, I discuss the benefits for insurers in getting engaged in these activities and possible hinders to do so. The aim is not to create an exhaustive overview of existing initiatives, but to explore what is done and what could be done and try to understand why insurance companies are not engaging themselves more in adaptation.