City Research Online

Abstract

Disaster insurance is central to how ci-es respond and adapt to climate change because insurance releases global capital to pay for local recovery and reconstruc-on in the aUermath of extreme weather disasters. Yet, rather than suppor-ng climate adapta-on, insurance markets appear to be retrea-ng in the face of climate change, with many ci-es facing unaffordable and unavailable disaster insurance. Loss of insurance has devasta-ng effects on ci-es, given its crucial role in social, business, and financial systems, providing a cri-cal safety net for many, and suppor-ng other important economic func-ons, such as mortgages and lending. This paper explains why ci-es and regions that are highly exposed to climate risk have become uninsurable and maps poten-al insurance op-ons for urban policymakers. While there is no simple solu-on for declining insurance affordability and availability, we map two poten-al op-ons; a risk pool, legislated by government to subsidize insurance for those who are uninsurable in the private sector, and a private-sector individual property parametric product to support a post-disaster cash injec-on. These two op-ons have precedent and could, therefore, improve the insurability of people in climate-exposed ci-es. However, policymakers need to be aware that these op-ons must be accompanied by risk reduc-on strategies. We conclude with two final thoughts for policy makers and city authori-es about insurability during a -me of changing climate. Firstly, inves-ng in programs to embed risk management capabili-es is necessary to support individuals and communi-es to live with increased risk exposure and act upon either of the above insurance op-ons. Secondly, addressing the insurance crisis is cri-cal to avoid the growing problem of uninsurability for those at high risk, which will widen inequality and poten-ally lead to unplanned climate migra-on for climate-exposed ci-es.

Publication Type:	Article
Publisher Keywords:	Insurance, insurance crisis, insurance protec-on gap, insurance risk pools, climate-exposed ci-es, parametric insurance, disaster risk reduc-on
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences G Geography. Anthropology. Recreation > GF Human ecology. Anthropogeography H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HN Social history and conditions. Social problems. Social reform H Social Sciences > HV Social pathology. Social and public welfare
Departments:	Bayes Business School Bayes Business School > Management
SWORD Depositor:	Symplectic Administrator

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