Page - 484 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

484 J.Linnerooth-Bayeret al. well asonARC’s initiative to link internationalpayments toclimate risks, raise the questionwhether thenarrativewill evolve fromsolidarity to responsibilitybasedon theprincipleofdevelopedcountryaccountability. Keywords Risk transfer ·Financial instruments ·Climatechange ·Catastrophic loss ·Safetynets ·Disaster risk reduction ·Equity ·Liability ·Compensation 21.1 Introduction Insurance has played a central role in discussions on adapting to the impacts of climate change, dating back to the early 1990s,when theAlliance of Small Island States(AOSIS)proposedaglobalinsurancefundtocompensatesmallislandsforsea- levelrise(seeintroductionbyMechleretal.2018).Takingstockofthishistory,aswell as the accumulated experiencewith catastrophe insurance instruments, this chapter asks if insurancemechanismscanhelp serve the intent of theWarsawInternational MechanismforLossandDamage (WIM)andArticle8.1of theParisAgreementof ‘averting,minimising and addressing loss anddamage associatedwith the adverse effectsofclimatechange,includingextremeweathereventsandslowonsetevents…” (UNFCCC2015,Article8).Thefocusisonweatherandclimateextremes, including droughts,floods,windstormsandotherhazards impactedbyanthropogenic climate change,whichoccur inparticularlyvulnerabledevelopingcountries. Although the precise intentions of theWIMare still unclear, and especially its distinction from climate adaptation (see chapters byMechler et al. 2018; Schinko etal.2018), theWIMExecutiveCommittee(2016)emphasises theroleof insurance in furthering climate riskmanagement, ormore specifically its role in proactively reducing and transferring risks. In addition, and importantly, discussions on Loss andDamage (L&D) and theWIMhave extended to adaptation limits and ‘beyond adaptation‘ (Schäfer et al. 2018). According to the UNFCCC, loss and damage “includes, and in some cases involves more than, that which can be reduced by adaptation”(Decision2/CP.19,UNFCCC2014).Thishasbeen interpretedbymany WIMcommentators, andespeciallydevelopingcountryparties, tosuggestcompen- sationforclimate-attributedlossesanddamagesexperiencedbythemostvulnerable communities (seeMace andVerheyen2016).A legal obligation to compensate for residual loss and damage (the climate-attributed losses and damages that remain once all cost-effective and socially/politically feasiblemeasures have been imple- mented(UNFCCC2012) is ruledout in theParisAgreement(Paragraph52),yetnot for the broader debate,where residual losses and damages resulting fromclimate- relatedextremes raiseethical issuesconcerning retributionor (non-legallybinding) compensation (see also Simlinger andMayer 2018). In linewith the discussion in Mechler and Schinko (2016) and the chapter by Schinko et al. (2018)we refer to risk reduction and (non-legally binding) compensation aspreventative andcurative responses, respectively, andexplore the roleof insurance instruments inpromoting these responses.