Assessment versions

Published (reviewed and quality assured)

• No published assessments

Rationale

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

• No rationale references available

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

Targets

No targets have been specified

Related policy documents

No related policy documents have been specified

Methodology

Methodology for indicator calculation

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

Methodology for gap filling

http://www.eea.europa.eu/publications/eea_report_2008_4/pp193-207CC2008_ch8_Data_gaps.pdf

Methodology references

No methodology references available.

Data specifications

EEA data references

• No datasets have been specified here.

External data references

• Direct economic losses from weather disasters

Data sources in latest figures

Uncertainties

Methodology uncertainty

http://www.eea.europa.eu/publications/eea_report_2008_4/pp193-207CC2008_ch8_Data_gaps.pdf

Data sets uncertainty

http://www.eea.europa.eu/publications/eea_report_2008_4/pp193-207CC2008_ch8_Data_gaps.pdf

Rationale uncertainty

No uncertainty has been specified