esko_kivisaari by qihao0824

VIEWS: 3 PAGES: 16

									      Towards a comprehensive and
 ambitious post-2012 climate change
                         agreement

WG III – Adaptation to climate change

                                           Esko Kivisaari
                                       Managing director,
                  Federation of Finnish Financial Services



                                          15 October 2008
About the CEA
                   33 National Member
                   Associations:


                      27 EU Member
                      States




                      + 6 Non-EU Markets
                      Switzerland, Iceland,
                      Norway, Turkey,
                      Liechtenstein, Croatia




                      2 Observers
                      Russia       Ukraine



      Source CEA
     Source CEA
                                      2
                                                  Climate change and insurance

         Number of global weather related disasters and
         the losses caused




Source: NatCatSERVICE, Geo Risks Research, Munich Re (July 2007)
                                                World Population Growth

           Billions
            12

             11
                                                                      2100
            10
             9                                                     Modern
                 Old                                                 Age
              8                                             Iron   Middle
                Stone                            Bronze
                              New Stone Age       Age       Age    Ages
              7 Age

              6                                                      2000      Future

              5

              4                                                      1975

              3
                                                                     1950
              2
                                                                     1900
              1                     Black Death —The Plague         1800


                  1+ million 7000 6000 5000 4000 3000 2000 1000 A.D. A.D. A.D. A.D. A.D. A.D.
                    years B.C. B.C. B.C. B.C. B.C. B.C. B.C. 1 1000 2000 3000 4000 5000



Source: Population Reference Bureau; and United Nations, World Population Projections to 2100 (1998).
                                                            Trends in Urbanization
                                                                              85
                                                                                             82
Urban Population (%)                                                     76
                                                                                        74


                  61
                                                          55
                                    54                                             53
             47
                                                                    42
                               37                    37

        29


                                                17
                          15




          World             Africa                   Asia        Latin America/      More
                                                                   Caribbean       Developed
                                                                                    Regions
                                         1950   2000      2030 (Projected)


  Source: United Nations, World Urbanization Prospects: The 2003 Revision (medium scenario), 2004.
                                                     Climate change and insurance

       No need to be fatalistic
          see traffic deaths                                                      Traffic deaths / 100 000 population since 1970

                               Tieliikennekuolemat


1200




1000




800




600




400




200




  0
  1920    1930   1940   1950    1960           1970   1980   1990   2000   2010




         insurers have much experience in loss protection
                 Climate change and insurance


At each stage of the process
Risk assessment: FW-looking & multi-dimensional models
Risk awareness: communication, mapping/zoning, pricing,...
Risk reduction: prevention, underwriting policy
Risk mitigation
      Re/insurance policies (eg micro-insurance)
      Financial markets (eg ART)


In public/private partnership (PPP)
                                                          Climate change and insurance

    All lines of business to be impacted
                                              Flood, storm                              Severe            Heat, drought            Cold weather,
                                                 surge                               weather, flash                                    frost
                                                                                         flood
                                                 ST              LT                      ST          LT    ST      LT                 ST            LT
Property
Engineering CAR1
Engineering EAR2
Marine
Agricultural3
Motor own damage
Aviation, space
Contingency risk (eg
events' cancellation)

Health
Life
1   Contractors' All Risks
2   Erection All Risks                                                                                                  negative effect - high
3   given the current coverage concept, multi-perils severely affected (corresponding to property)                      negative effect - medium
Source: Munich Re, Geo Risks Research, 2004
                                                                                                                        negative effect - low
                                                                                                                        positive effect - insignificant
                                                                                                                        positive effect - low
                                                                                                                        positive effect - medium
                Climate change and insurance

Several initiatives such as:
  Munich Climate Insurance Initiative
    Launched by Munich Re in 2005
    Aim: finding solutions to the risks posed by climate change
    (loss reduction, insurance,...)
  Climate Adaptation Development Program
    Launched by Swiss Re in 2007
    Aim: developing financial risk transfer market for the effects of
    adverse weather in emerging countries
  Climate Wise
    Launched by the Association of British Insurers (ABI) in 2007
    Aim: encouraging customers to change their habits and
    influencing policy
               Climate change and insurance
Challenges

 Statistics
 Insurance capacity
   do transfers to capital markets via securitisation help?
 Correlation
 Anti-selection
 Moral hazard
       Priorities for technology cooperation
New technology such as renewable energy
production needs
  financing and
  insurance
to become commercially viable.
Lack of experience (no statistics) in this are
means higher risk margins both in financing
and in insurance
research, not only by industry, is needed
      Priorities for technology cooperation
Knowledge building and sharing
  gathering and sharing of data, models and
  analyses
  forward-looking impact assessment
  Impact on both adaptation and mitigation


Platform for the exchange of best
practices on
  Research
  Education
  Tools such as risk zoning/hazard mapping
        Financial sources and mechanisms
Ex-ante financed schemes
  more efficient
  more effective
    Increased awareness and
    stronger involvement of stakeholders


Conditionality / penalty clause

Liquid and stable financial markets
  Alternative Risk Transfer instruments
               Institutional architecture and
                       enabling environment
long-term, strong and effective framework
  stable legal and political environment
     For businesses to adapt their strategies (business plan)
  Strong involvement of the authorities
     national adaptation plans, policy measures such as
     land use planning, public-private partnerships
     high standard of risk management rules (building
     codes, land use planning, etc)
  Flexibility
     Principle-based
     Adaptable to the local conditions
     Market-led initiatives
                        How much is much?

According to the IPPC (Intergovernmental Panel
of Climate Change) the cost of mitigation is
0.13 % of the global GDP until 2030
The Federation of Finnish Financial Services
has used Capgemini forecasts saying that in
payment systems (SEPA) the potential savings
for the economy as a whole are 0,12-0,22 of the
GDP (EU-16) – and this is just the SEPA part of
e-services
For more information
         www.cea.eu



               CEA aisbl
               Square de Meeûs 29
               B-1000 Brussels

								
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