Direct losses from weather disasters

This website has limited functionality with javascript off. Please make sure javascript is enabled in your browser.

Created : Jul 11, 2008 Published : Sep 08, 2008 Last modified : Nov 14, 2012 11:40 AM

Topics: Climate change ,

Update planned for November 2012

Note: new version is available!

Nov 20, 2012 - Damages from weather and climate-related events

Contents

Assessment versions

Published (reviewed and quality assured)

Direct losses from weather disasters (CLIM 039) - Assessment published Sep 2008

Justification for indicator selection

Changes in the frequency and intensity of storms, floods and extreme temperatures affect the financial sector, including the insurance sector, through the amount of compensation payments. Examining insurance claims related to weather disasters can help to identify the sectors (e.g. agriculture, forestry, infrastructure, industry or private households) that are most affected by damage and/or could be most affected in future. A recently published report from the United Nation Environment Programme's Finance Initiative (UNEP FI, 2006) estimated that losses from weather events are doubling globally every 12 years. Even though the observed increase in losses is dominated by socio-economic factors (such as population growth, increased number of habitations in vulnerable areas, increased wealth, increased amount and value of vulnerable infrastructure), there is evidence that changing patterns of natural disasters are also drivers. It is however not known how much of this increase in losses can be attributed to anthropogenic climate change (Hoppe et al., 2006). Insurance mechanisms are key in risk management and hence can play an important role in adapting to climate change by covering the residual risks and providing incentives for risk reduction. Through their underwriting policy, the (re)insurance companies can indeed increase risk awareness and provide incentives for risk reduction. Insurance companies have inherent interests in minimising the impacts of climate change in order to maintain residual risks insurable. Through their investment policy and asset management, the financial sector as a whole (savings, loans and insurance companies as well as other institutional investors) has great influence on companies' investment decisions. They can therefore ensure that any investments made are more climate-resilient and channel money into projects related to adaptation and mitigation of climate change. On the other hand the industries with greatest exposures will have to respond increasingly with innovative products, e.g. catastrophe bonds (Bouwer et al., 2007).

Scientific references:

References ABI, 2005. Financial risks of climate change -- summary report. http://www.abi.org.uk/Display/File/Child/552/Financial_Risks_of_Climate_Change.pdf . ABI, 2007. Adapting to our changing climate: A manifesto for business, government and the public. http://www.abi.org.uk/BookShop/ResearchReports/Climate_Change_FINAL.pdf . Bouwer, L. M.; Crompton, R. P.; Faust, E.; Höppe, P. and Pielke R. A. Jr., 2007. Disaster management: Confronting Disaster Losses. Science 318 (5851): 753. Höppe, P. and Pielke Jr., R. A., 2006. Workshop Summary Report. In Workshop on Climate Change and Disaster Losses: Understanding and Attributing Trends and Projections, Höppe, P. and Pielke, Jr. R. A. (eds.). Hohenkammer, Germany, 4-12. IPCC, 2007a. Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Solomon, S.; Qin, D.; Manning, M.; Chen, Z.; Marquis, M.; Averyt, K. B.; Tignor M. and Miller H. L. (eds.). Cambridge University Press, Cambridge, UK. IPCC, 2007b. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Parry, M. L.; Canziani, O. F.; Palutikof, J. P.; van der Linden, P. J. and Hanson, C. E. (eds.). Cambridge University Press, Cambridge, UK. Kovats, R.S. and Jendritzky, G., 2006. Heat waves and human health, in: Climate Change and Adaptation Strategies for Humans Health (eds. B. Menne and K.L. Ebi), Steinkopff, Darmstadt, Germany. Munich Re, 2007. Naturkatastrophen in Europa, unpublished data. Robine, J. M.; Cheung, S. L.; Le Roy, S.; Van Oyen, H. and Herrmann, F. R., 2007. The CANICULE- project: The excess mortality in summer 2003; Presentation. Bonn, WHO-meeting on improving public health responses to extreme heat, 22.03.2007. Schär, C.; Vidale, P. L.; Lüthi, D.; Frei, C.; Häberli, C.; Liniger, M. A., and Appenzeller, C., 2004. The role of increasing temperature variability in European summer heatwaves. Nature 427: 332-336. UNEP FI, 2006. Adaptation and vulnerability to climate change: the role of the finance sector. United Nations Environment Programme Finance Initiative, Geneva, Switzerland. Also available at http://www.unepfi.org/fileadmin/documents/CEO_briefing_adaptation_vulnerability_2006.pdf . Watkiss, P., 2006. The Social Costs of Carbon (SCC) Review -- Methodological Approaches for Using SCC Estimates in Policy Assessment, Final Report to Defra. Published January2006. Paul Watkiss with contributions from David Anthoff, Tom Downing, Cameron Hepburn, Chris Hope, Alistair Hunt, and Richard Tol. http://www.defra.gov.uk/environment/climatechange/carboncost/aeat-scc.htm .

Indicator definition

Natural disasters in Europe 1980-2007
Overall and insured losses from weather disasters in Europe 1980-2007

Units

http://www.eea.europa.eu/publications/eea_report_2008_4/pp161-192CC2008Ch6_7Adaptation_Consequences.pdf

Policy context and targets

Context description

In April 2009 the European Commission presented a White Paper on the framework for adaptation policies and measures to reduce the European Union's vulnerability to the impacts of climate change. The aim is to increase the resilience to climate change of health, property and the productive functions of land, inter alia by improving the management of water resources and ecosystems. More knowledge is needed on climate impact and vulnerability but a considerable amount of information and research already exists which can be shared better through a proposed Clearing House Mechanism. The White Paper stresses the need to mainstream adaptation into existing and new EU policies. A number of Member States have already taken action and several have prepared national adaptation plans. The EU is also developing actions to enhance and finance adaptation in developing countries as part of a new post-2012 global climate agreement expected in Copenhagen (Dec. 2009). For more information see: http://ec.europa.eu/environment/climat/adaptation/index_en.htm