The Insurance Industry: Adaptation Drivers

Author: Joyce Coffee

The Insurance Industry: Adaptation Drivers

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An edifying conversation with Tom Herbstein, programme manager for the ClimateWise[1] initiative of the University of Cambridge Institute for Sustainability Leadership, led me to peruse a ClimateWise case study I had skimmed when published in 2010. It is Adapting to the extreme weather impacts of climate change – how can the insurance industry help? And I was delighted to grasp so much from a resource whose lessons remain very relevant today. Here are my takeaways.

Overall, the case study reminded me that the insurance industry provides a great resource for adaptation thought leadership. For instance, Swiss Re’s Sigma annual publication on natural catastrophes and man-made disasters and the intriguing and helpful Global Risk Map published by the United Nations’ Principals for Sustainable Insurance are referenced frequently referenced by those of us working in adaptation.
Key is that insurance serves as an integral element of the entire risk-management cycle – from identification to risk transfer and recovery. The insurance industry:

  • Contributes to a better understanding of risk through, for example, the development of forward-looking risk models.
  • Adds to risk awareness through risk-based terms and conditions and advice to its customers, and offers incentives to increase prevention and other risk-management measures.
  • Assists policymakers to guide society with such tools as land use planning and building codes.

The insurance industry and ND-GAIN possess a special relationship. ND-GAIN pursues its mission to increase global awareness of the need to adapt and thus inform investments that save lives and improve livelihoods. This helps the insurance industry enhance its customer understanding of risk and risk-reduction measures. As a third-party, university-lead entity, we serve as a tool used by the insurance industry to better promote adaptation with its clients.

It’s important to note that efforts to maintain or create insurability – a key adaptive capacity – provide business opportunities for the insurance and risk-management sector. A range of factors such as profit protection, strategic aims, public relations and corporate social responsibility drives insurers’ engagement in adaptation. But these factors do not necessarily drive insurers to operate in lower-income and least-developed countries, thus potentially contributing to a high percentage of uninsured. When considering adapting to climate change in developing countries, the insurance industry can support adaptation through:

  • Expertise in risk management
    • Placing a price tag on risk.
    • Influencing the design of risk-reduction and risk-transfer activities.
  • Expertise in adaptive capacity
    • Putting a price tag on resilience measures.
    • Influencing the design of adaptive capacity actions.


This expertise should help to incentivize loss reduction by informing stakeholders (governments and regulators, clients and business partners, business and industry, civil society and academia) about the risks they face, advising them on risk mitigation/adaptive capacity options and providing them with existing insurance options for loss reduction.


[1] The ClimateWise Principles were launched in September 2007 by the CEOs of 16 leading insurance industry players, thereby committing their organizations to a wide range of actions on climate change, to reporting in public on those actions on an annual basis and to subjecting themselves to independent review of their progress.