Page - 487 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

21 InsuranceasaResponse toLossandDamage? 487 Fig.21.1 Overview of ‘riskmanagement applications’ of insurance, in the context of loss and damage .Adapted fromWarneret al. (2012) 21.2.2 CanInsuranceCoverAllLossandDamage fromClimateChange? Itshouldbeemphasisedthatinsurancecannotprovidefinancialprotectionagainstall impacts fromclimatechange (Warner et al. 2009).Asshown inFig.21.1 insurance is an instrument for financing the recovery fromextreme and non-gradual climate events, likefloods,windstormsanddroughts,butisnotsuitedformanagingthedam- age causedby slow-movingor gradual changes that include, amongother impacts, sea-level rise, desertification, loss of habitat, loss of biodiversity, erosion, ocean acidification andglacial retreat (chapter byBouwer2018).At the same time, these slowclimaticchangescanbecomemanifestthroughinsurablerapid-onsetevents,for example, sea-level riseexacerbates stormsurge levelsandcoastalflooding.Equally difficult to insureare small-scaleevents forwhichdamagesaremostlyexpressed in the cumulativewear-and-tear of assets and infrastructure (Moftakhari et al. 2017). Insurance thus has clear limitations, as it can only cover those events that are suf- ficiently randomand infrequent in their occurrence. Finally, as shown inFig. 21.1, the rangeof loss events (rapid-onset to gradual) is accompaniedby a rangeof pol- icy support instruments for risk reduction or reimbursing impacts—from support for insurance instruments (e.g., public subsidiesor reinsurance)or insurance-linked prevention, to reparations forgradualonset impacts.