Direct losses from weather disasters
Published (reviewed and quality assured)
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).
- 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 .
- Natural disasters in Europe 1980-2007
- Overall and insured losses from weather disasters in Europe 1980-2007
Policy context and targets
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
No targets have been specified
Related policy documents
No related policy documents have been specified
Key policy question
Methodology for indicator calculation
Methodology for gap filling
No methodology references available.
EEA data references
- No datasets have been specified here.
External data references
Data sources in latest figures
Data sets uncertainty
No uncertainty has been specified
Short term work
Work specified here requires to be completed within 1 year from now.
Long term work
Work specified here will require more than 1 year (from now) to be completed.
Responsibility and ownership
EEA Contact InfoHans-Martin Füssel
Typology: Descriptive indicator (Type A – What is happening to the environment and to humans?)