Seite - 327 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

13 ExploringandManagingAdaptationFrontiers… 327 security” (Surminski and Oramas-Dorta 2013) might reduce the urgency for risk preventionand reduction, and thereby increasevulnerability toextremeevents. 13.3.3 InsuranceasaSupportTool forActors toRemain in theTolerableRiskSpace Effectivelymanaging increasing climate change risk is a precondition for actors to remainwithin the tolerable risk space (Mechler andSchinko 2016). Insurance can support riskmanagement strategies ex-post as safety net andbuffer for people and countries, particularly for lowfrequencyandmoderate tohighseverity risks. ProvidingaSafetyNetandBuffer: InsuranceasPartofContingencyStrategies Contingency strategies,managingunexpected shocks fromclimate stressorswhich couldnothavebeenreasonablyanticipatedthroughpre-emptiveactions,canprovide akeymeansforactors toremainwithin the tolerable riskspace.Thesestrategiesare needed, in addition to planning and pre-emptive undertakings, as some climate- relatedimpactareunforeseeableat thetimeofplanningorthemagnitudeofclimate- relatedimpactsmightsurpassesestimates.Also,incaseswhereunforeseenimpactsor costsarosefromtransboundaryclimatechangeimpactsorresponsesorimpactswere foreseeable, but response actionswere economically or technologically unfeasible at the timeofplanning,contingencyapproachesarenecessary.Thestrategiesshould complement and facilitate approaches to address longer-term incremental climate impacts, risks, andvulnerabilities associatedwithclimatechange. Insuranceplaysan important roleaspartofcontingencystrategies.Byproviding timelyfinancethat improvesfinancial liquidityshortlyafteradisaster, insurancecan playa role as a safetynet andbuffer forpeople andcountries shortly after anevent (Warner et al. 2012).Under these circumstances, insurance canhelp the insured to better absorb shocks, as theymaynot have to resort to coping strategies thatmight impedesustainabledevelopment(Okonjo-IwealaandThunell2015).Timelyandreli- able payouts enable households to protect their livelihoodswhenadisaster strikes: It canhelp individuals tocover lossesanddamages, stabilise their income,purchase foodandothernecessitiesandavoidcostlyassetdepletion,ultimatelyallowingpeo- ple tochoosealternativemeansofcopingwithnegative shocks (Derconetal. 2005; Barrettetal.2007;SkeesandCollier2008).There issignificantevidence that insur- ancetoolscanhelppeopletoreducedistressassetsalesandtoincreasefoodsecurity, bothenabling faster recoveryafter a shock (Greatrexet al. 2015;Bertram-Hümmer andKraehnert2015;Reyesetal.2015;JanzenandCarter2013).Basedonthetimely finance, insurancecanalsohelptoavoidbusinessinterruptionsandfiscaldeficitsand postdisaster loans (e.g.CCRIFSPC2010).Byreducing the residual risk that could notbereducedbymeasuresalreadytaken, insurancecanhelp lessenfinancial reper- cussionsofvolatilityand, in the longer term,helppeople toadapt toclimatechange. Insurance is an adaptationmeasurewhen it reduces theburdenof climate impacts, risks, andvulnerabilities, if not theaverage loss (Linnerooth-Bayeret al. 2010).