• ABIR Policy Statement: Climate Change and Building Resilience

    Climate Change | 09.29.2015

     ABIR Policy Statement: Climate Change and Building Resilience

    Approved December 2, 2009
    Revised September 29, 2015
    ABIR Board of Directors

    Substantial scientific evidence documents that human activity is affecting the climate of the earth.  Although it is impossible to predict how and when this climate change will affect the weather in specific geographic areas, we can assume that the impact of climate change on (re)insurance risk will be significant.  Given changes in the climate, the ability to forecast future loss experience based on past historical experience is jeopardized. Climate change has implications for ABIR members as (re)insurers, businesses, investors, citizens and employers. As experts on risk assessment and risk mitigation, insurers should be engaged with policymakers and other stakeholders to work on climate change adaptation measures that would maximize loss mitigation techniques and increase resilience in both the natural and manmade environment.

    The members of ABIR will work to:

    • Educate policy makers on the impact of climate change on (re)insurance risk and the individual decisions (re) insurers may make to integrate climate risk into (re)insurance underwriting decisions.
    • Develop industry tools that identify, analyze and quantify risk that can be used by policy makers across a broad range of sectors to design in resilience in the natural and manmade environment.
    • Promote natural hazard loss mitigation techniques that will protect both people and property from severe weather related losses and help society adapt to climate change. Industry experience with land use, zoning, construction materials, building codes and standards can help policymakers in designing resilience into the built environment.
    • Shape proposed trade, tax and insurance regulation so that like kinds of (re)insurance risk can be written globally to achieve the benefits of diversification.
    • Develop (re) insurance products that will aid the growth of new technologies aimed at protecting against the impacts of future climate change.
    • Work to reduce our own business carbon footprints.
    • Consider the implications of climate change on our corporate investment portfolios.
    • Support thoughtful, coordinated research of climate change, adaptation techniques and the implications for (re)insurance risk.

    If created with a strong risk management emphasis, public-private partnerships can encourage utilization of insurance as a risk financing strategy in the developing world. In such partnerships insurers can play a key role in identifying, assessing, preventing and reducing risk.

    Pricing of risk can be an essential incentive to encourage risk management. Risk based pricing and diversification of risk  are essential elements of the industry’s ability to take on natural disaster risks and profit potential is essential to a sustainable insurance market.