Climate insurance - A role for adaptation planning
It’s actually not that easy to figure out whose job it is to “solve” climate change.
Governments because their policies influence the biggest emitters and are responsible for how infrastructure gets developed? Private sector because they are the drivers of economic production? Banks & financial institutions because they manage the massive investment needs that go into this endeavor? The general public because how we consume is key to changing some of the more damaging economic activities?
The truth is that we need nothing short of all these actors playing their respective key roles. This not only true for climate mitigation actions, but also relevant for climate adaptation work.
For climate adaptation work, one interesting role is that of the insurance industry.
The insurance industry should have an important role in climate adaptation work because the immense infrastructure costs required to develop adaptation measures for all our critical infrastructure cannot all be borne by governments. There should be a greater recognition in adaptation planning that climate risks beyond a threshold can and should be covered by insurance. This is a more balanced approach, as other tangible costs for clean-up, emergency services, damage to public infrastructure are already born by governments.
Intangible impacts such as disruption/loss of use, physical health & damage to environmental resources are ultimately borne by the wider community. This is also an area where the insurance industry can play an interesting role, especially as we get better at building quantifiable measures for these impacts.