Isolation as a Barrier for the Climate Change Actions of Insurers

Abstract

Weather-related disasters are causing claims which have an impact on various stakeholders. In the case of economic loss, the right insurance coverage reduces the likelihood of financial impacts and is thus critical for climate change resilience. The insurance industry is highly exposed to climate change but is also able to offer solutions and a wide range of actions to tackle climate change adaptation issues. Therefore, many insurers are leaders in terms of how they help address climate adaptation for private entities. Many actors and institutions are calling for a proactive approach from different private entities, such as insurers, to help deal with climate change, but barriers to action are evident. This chapter explores the concept of isolation as a barrier to insurers’ awareness, role, and actions. It derives from a wide range of factors, that isolation can be divided into a number of forms: (1) geographical, (2) political, (3) knowledge, (4) communication, (5) competitive, (6) technological, (7) institutional size, and (8) customer-related isolation. Many of these barriers have factors and impacts which are interrelated. Findings suggest that multistakeholder and public-private partnership solutions may be used to overcome barriers of isolation, thereby reinforcing resilience. Particular examples are used to illustrate the barriers such as recent legislative developments (the Task Force on Climate-Related Financial Disclosures), growth of leading industry collaborations (Principles for Sustainable Insurance), and private-public partnership growth (city-resilience platform). The identification of the isolation factors are of relevance for academia, policymakers, and industry practitioners as it allows for further studies of the topic and may influence actions of policy-makers regulating business and practitioners’ addressing the isolation issues recognized in this chapter.