Reinsurance News

European insurers see adaptation as vital as IPCC warns of irreversible climate impacts

28th February 2022 - Author: Luke Gallin

As the Intergovernmental Panel on Climate Change (IPCC) releases its latest report, insurers and reinsurers across Europe agree that adaptation is vital to ensure climate resilience, reports Insurance Europe.

The European insurance and reinsurance federation, Insurance Europe, “fully supports the need for a very strong focus on adaptation, as suggested by the IPCC in its latest report,” said Nicolas Jeanmart, the federation’s head of personal and general insurance.

Comprised of the world’s leading climate scientists, the IPCC publishes regular updates on the climate crisis, designed to inform and aid government policymaking. Each report takes years to complete and is reviewed by hundreds of scientists and experts.

The current report is being published in several stages, and the latest report, ‘Climate Change 2022: Impacts, Adaptation and Vulnerability’, was published today. This phase of the publication explores the effects of climate change, such as extreme weather and temperature rises, and how humanity can adapt.

Ultimately, the report finds that climate change risks are greater than thought and warns of a “brief and rapidly closing” window to adapt.

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In a stark warning to the world, the report claims that certain losses are already beyond repair and that ecosystems are reaching limits.

At the same time, the irreversible impacts of global warming are expected to have an influence on extreme weather events, a trend many argue is already evident in light of unprecedented floods and droughts, unseasonal storms, and more frequent wildfires around the world.

“Strong measures are, of course, vital to mitigate climate change, which is why Insurance Europe supports the objective of European policymakers to reduce EU greenhouse gas emissions by at least 55% by 2030,” said Jeanmart. “At the same time, the latest IPCC report is a very strong reminder that climate change adaptation measures are equally important — and increasingly urgent — to ensure the climate resilience of citizens and societies at large.”

It’s clear that adaptation is key and needs to be robust, but as noted by Jeanmart, implementation requires input from a wide range of stakeholders, starting with governments.

“We therefore call on policymakers at local, national and regional levels to ensure that enough attention is paid to climate change adaptation. This includes measures such as adapting critical infrastructure to increase its resilience to climate change, and adapting and duly implementing building codes and land-use planning,” said Jeanmart.

When it comes to the impacts of extreme weather events, the insurance and reinsurance sector has more knowledge and experience than any other industry, alongside some of the most advanced modelling capabilities for such exposures.

Given the re/insurance market’s position and skillset, it has a key role to play in the climate fight, and Jeanmart highlighted how carriers are already cooperating with public authorities at national, regional, and local level.

“Insurance cover is a crucial aspect of building resilience in the wake of extreme weather events. Indeed, societies with a higher penetration rate tend to recover from these events more quickly than those with a relatively low rate.

“Insurers also measure and price climate risk to inform the risk management of businesses and individuals, and can provide advice on how to develop innovative adaptation solutions. These measures can complement the significant climate change adaptation measures that need to be taken by public authorities,” concluded Jeanmart.

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