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21 InsuranceasaResponse toLossandDamage? 507
taryinNatureClimateChange,Surminskiandcolleagues(2016)explicitlyraisethis
issue:
As the intensity and frequencyof climateextremes increase, is it fair to shift responsibility
on to thosewhoare the least responsible for climate change, the least able to shoulder the
premiums, and inmanycases the least able to reduce their losses?
AstherecentG20/V20GlobalPartnershiponInsuResilience(launchedatCOP23)
shows, the need for donor support is increasingly accepted by the development
finance community. Importantly, this financial support should be âsmartâ, under-
stood as reliable, flexible,minimise incentive distortions, andmake the recipients
aware of the true cost of the covered risk (Schäfer andWaters 2016). In thisway,
subsidised insurance can be linked to risk reduction (Hill et al. 2014; Vivid Eco-
nomics et al. 2016).As a concrete proposal,Kunreuther andMichel-Kerjan (2009)
havearguedthat thesubsidyshouldtaketheformofaninsurancevouchersothat the
recipient isawareoftheunsubsidisedpremium.Inaddition,donorsupportshouldbe
conditional by requiring contingency and disbursement plans (Schäfer andWaters
2016;Surminski et al. 2016).Asuggestion recently iteratedbySchäfer andWaters
(2016) is that smart premium support should cover only part of the premium, for
example, only themarkup (the risk and expense loads)while the beneficiary pays
just theactuarial fairvalueorpurepremium.
The message this chapter holds for the L&D discussions is to advise caution
about relyingon themarket, alone, toprovide insurancefor fulfillingaspirations for
theWIM, and to recognise the criticality of international and public intervention
in climate insuranceprovision. Interventions can include subsidies, technical assis-
tance,capitalisationof insuranceprograms,provisionofreinsuranceandother types
of support that make insurance affordable to resource-poor and climate-sensitive
clients; interventionscanalsoenable regulatoryregimesandpublic-privatearrange-
ments thatexploit thepotential for insurancetogenuinelycatalyseriskreductionfar
beyondwhathasbeenaccomplishedbycommercial insurers thus far. It is therefore
important tocontinuedevelopingâsmartâ regionalornationalprograms thatexplic-
itly combine insurancewith loss prevention and that address the emerging equity
issues as climate change impacts the most vulnerable and least responsible. The
WIMExecutiveCommittee continues to contemplate subsidies for pro-poor insur-
anceprograms (ExecutiveCommittee to theWIM2016), ameasure thatwill grow
in importance if the insurance narrative continues to evolve from solidarity-based
humanitarianassistance toaccountability for climate-attributed impacts.
References
AllianceofSmall IslandStates (AOSIS) (2008)Proposal to theAWG-LCAmulti-windowmecha-
nismtoaddress lossanddamage fromclimatechange impacts
ArentDJ,TolRSJ,FaustE,HellaJP,KumarS,StrzepekKM,TĂłthFL,YanD(2014)Keyeconomic
sectorsandservices. In:FieldCB,BarrosVR,DokkenDJ,MachKJ,MastrandreaMD,BilirTE,
ChatterjeeM,EbiKL,EstradaYO,GenovaRC,GirmaB,KisselES,LevyAN,MacCrackenS,
Loss and Damage from Climate Change
Concepts, Methods and Policy Options
- Title
- Loss and Damage from Climate Change
- Subtitle
- Concepts, Methods and Policy Options
- Authors
- Reinhard Mechler
- Laurens M. Bouwer
- Thomas Schinko
- Swenja Surminski
- JoAnne Linnerooth-Bayer
- Publisher
- Springer Open
- Date
- 2019
- Language
- English
- License
- CC BY 4.0
- ISBN
- 978-3-319-72026-5
- Size
- 16.0 x 24.0 cm
- Pages
- 580
- Keywords
- Environment, Climate change, Environmental law, Environmental policy, Risk management
- Categories
- International
- Naturwissenschaften Umwelt und Klima