NDLI: Insuring future climate catastrophes

Content Provider	Springer Nature Link
Author	Kunreuther, Howard Michel Kerjan, Erwann Ranger, Nicola
Copyright Year	2012
Abstract	The combined influences of a change in climate patterns and the increased concentration of property and economic activity in hazard-prone areas has the potential of restricting the availability and affordability of insurance. This paper evaluates the premiums that private insurers are likely to charge and their ability to cover residential losses against hurricane risk in Florida as a function of (a) recent projections on future hurricane activity in 2020 and 2040; (b) insurance market conditions (i.e., soft or hard market); (c) the availability of reinsurance; and (d) the adoption of adaptation measures (i.e., implementation of physical risk reduction measures to reduce wind damage to the structure and buildings). We find that uncertainties in climate projections translate into a divergent picture for insurance in Florida. Under dynamic climate models, the total price of insurance for Florida (assuming constant exposure) could increase significantly by 2040, from $12.9 billion (in 1990) to $14.2 billion, under hard market conditions. Under lower bound projections, premiums could decline to $9.4 billion by 2040. Taking a broader range of climate change scenarios, including several statistical ones, prices could be between $4.7 and $32.1 billion by 2040. The upper end of this range suggests that insurance could be unaffordable for many people in Florida. The adoption of most recent building codes for all residences in the state could reduce by nearly half the expected price of insurance so that even under high climate change scenarios, insurance premiums would be lower than under the 1990 baseline climate scenario. Under a full adaptation scenario, if insurers can obtain reinsurance, they will be able to cover 100 % of the loss if they allocated 10 % of their surplus to cover a 100-year return hurricane, and 63 % and 55 % of losses from a 250-year hurricane in 2020 and 2040. Property-level adaptation and the maintenance of strong and competitive reinsurance markets will thus be essential to maintain the affordability and availability of insurance in the new era of catastrophe risk.
Starting Page	339
Ending Page	354
Page Count	16
File Format	PDF
ISSN	01650009
Journal	Climatic Change
Volume Number	118
Issue Number	2
e-ISSN	15731480
Language	English
Publisher	Springer Netherlands
Publisher Date	2012-12-14
Publisher Place	Dordrecht
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Atmospheric Sciences Climate Change Impacts
Content Type	Text
Resource Type	Article
Subject	Atmospheric Science Global and Planetary Change

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
5	Website/Portal (Helpdesk)	Queries regarding NDLI and its services	support@ndl.gov.in
6	Contents and Copyright Issues	Queries related to content curation and copyright issues	content@ndl.gov.in
7	National Digital Library of India Club (NDLI Club)	Queries related to NDLI Club formation, support, user awareness program, seminar/symposium, collaboration, social media, promotion, and outreach	clubsupport@ndl.gov.in
8	Digital Preservation Centre (DPC)	Assistance with digitizing and archiving copyright-free printed books	dpc@ndl.gov.in
9	IDR Setup or Support	Queries related to establishment and support of Institutional Digital Repository (IDR) and IDR workshops	idr@ndl.gov.in

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