1、ABuilding a climate resilient futureFive priorities for the global insurance industryThis report is a joint initiative between the UN Climate Change High-Level Champions,the UN Race to Resilience,the Adrienne Arsht-Rockefeller Foundation Resilience Center,and Marsh McLennan.It is prepared with the r

2、esearch,writing,and support of Oliver Wyman.Statement of purposeThe Race to Resilience Campaign(RtR)and the Sharm El Sheikh Adaptation Agenda(SAA)provide the frameworks that can help businesses deliver on adaptation and resilience:We urgently need to significantly enhance adaptation and resilience f

3、or communities,sectors,economies,and ecosystems upon which they depend against the impact of climate change.Without it we cannot deliver on the goals of the Paris Agreement.This year,I have worked closely with banks,insurers,and investors worldwide and have seen exceptional leadership in the private

4、 financial sector on adaptation and resilience lets accelerate the solutions that are already there!Dr.Mahmoud Mohieldin UN Climate Change High-Level Champion for COP28;UN Special Envoy on Financing the 2030 Agenda;Executive Director of the IMFA note from a UN Climate Change High-Level ChampionForew

5、ordOver the past two years,Marsh McLennan has worked closely with UN Climate Change High-Level Champions,its Race to Resilience team,and the Arsht-Rock Resilience Center to spur awareness and catalyze action around the urgent need to advance climate adaptation.Since then,a global framework for prote

6、cting the worlds most vulnerable has begun to take shape.The Sharm el-Sheikh Adaptation Agenda,ratified at COP27,sets actionable 2030 targets for 30 sectors that collectively aim to protect four billion people from the extreme impacts of droughts,floods,wildfire,heat,and other climate-related risks.

7、The G7 launched the Global Shield to amass and deploy the financial resources needed to accelerate impact.And the topic of loss and damage has become central to multilateral negotiations,no longer relegated to the fringes of the dialogue.Central to maintaining this momentum will be the active leader

8、ship of the insurance sector.We are the sector that possesses the analytical capabilities and risk finance expertise to drive innovation and scale impact.That is why we are proud to publish this second report jointly with the Race to Resilience and the Arsht-Rock Resilience Center on how the insuran

9、ce sector can deliver that leadership.This report identifies many of the barriers impeding insurers from prioritizing risk reduction efforts and issues a series of actionable recommendations to overcome those challenges.Like last year,it also features a sampling of the best ideas and projects reflec

10、ting both the spirit and urgency of climate adaptation innovation.On behalf of all the reports sponsors,we applaud those companies demonstrating change-making leadership,and urge the entire industry to consider its role in advancing the recommendations in this report.Contents1.Executive summary 12.I

11、ntroduction 23.Barriers to the insurance industry playing a more widespread role in adaptation and resilience 63.1.Demand-side constraints 63.2.Supply-side constraints 73.3.Regulatory and policy constraints 84.A resilience agenda for the insurance industry 9Recommendation 1:Prioritize resilience as

12、a strategic imperative 10Recommendation 2:Collaborate with the public sector to expand insurancecoverage 16Recommendation 3:Improve accuracy and availability of climate-relateddata and analytics 20Recommendation 4:Create an industry standard around“build back better”23Recommendation 5:Advocate for p

13、ublic policies and regulations that support resilience 265.Roadmap for success 30Supplement:Ongoing adaptation and resilience insurance initiatives 31Acknowledgements 5211.Executive summaryOver the past 50 years,the number of weather-related disasters has risen five-fold,with climate change generall

14、y accepted to be a primary driver.Thisrise,coupled with an increase in the value of assets and population movement to high-risk areas,has resulted in a significant increase in losses.Investing in adaptation and resilience is critical to combat these rising costs and ensure that communities around th

15、e world can better withstand and recover from disaster.The insurance industry is uniquely positioned to support and reward investments in adaptation and resilience.Transferring risk through insurance coverage provides households,businesses,and communities with the funding they need to recover rapidl

16、y from disasters.Additionally,insurers have the data and risk expertise to encourage risk-reducing activities,enable more resilient communities,and directly invest in resilience.By playing a larger role in increasing resilience,insurers have the power to reduce overall weather-related losses,protect

17、 their existing markets,and expand coverage into new markets the combination of which presents a$71billion annual revenue opportunity for the insurance industry.1However,the insurance industry must address several barriers to fulfilling the potential for a more widespread role in adaptation and resi

18、lience.This report presents five recommendations on how the insurance industry can better address these barriers,build climate resilience,and seize commercial opportunities:1.Prioritize resilience as a strategic imperative.Only 10%of insurers disclose resilience targets and metrics in their sustaina

19、bility reporting,suggesting a lack of strategic focus on resilience inthe industry.Byprioritizing resilience,insurers can better steer products,distribution,and investment toward areas of the portfolio that aremost at risk,ultimately improving the long-term viability oftheir businesses.2.Collaborate

20、 with the public sector and civil society to expand coverage.Public-private partnerships deliver higher levels of insurance penetration than private insurers alone.These partnerships,which can include government bodies,non-profits,community bodies and other organizations,provide insurers with access

21、 to underserved communities and protect existing markets from climate-driven premium inflation.Public-private partnerships will likely become increasingly important as the frequency and severity of weather-related disasters continuesto rise.3.Improve accuracy and availability of climate-related data

22、 and analytics.Insurers can better price risk,incentivize resilience,and expand coverage to underserved populations by improving data quality,data availability,and catastrophe modeling.This data can also be made available to governments and public utilities to better target resilience and adaptation

23、 activities for greatest impact.4.Create an industry standard around the concept“build back better.”Ensuring rebuildingand infrastructure projects prioritize climate adaptation and resilience will significantly reduce financial losses from natural disasters.Insurers can directly facilitate and incen

24、tivize pre-and post-disaster structural improvements aspartof their policies.5.Advocate for public policies and regulations that support resilience.Insurers can educate government stakeholders and regulators on existing risks and the role insurers can play in increasing resilience.Insurers should ge

25、t involved much earlier and to a greater degree in influencing community risk-based planning,building code regulations,and land-use decisions.Supporting adaptation and resilience has clear commercial value for the insurance industry and fulfills an important social good.Insurers already have many of

26、 the tools at hand to expand their role beyond traditional risk transfer,but many have not undertaken the mindset shift that allows this potential to be realized.Successfully fulfilling this agenda will improve societal resilience and drive long-term success for insurers in the face of climate chang

27、e.22.IntroductionThe intensification of heat waves,floods,droughts,wildfires,storms,and other climate-related hazards has far-reaching implications on communities and ecosystems globally.The average global surface temperature has increasedto 1.1 degrees Celsius above pre-industrial levels and the co

28、nsequences are readily apparent for the increased frequency and intensity of natural disasters.2 The latest Emissions Gap Report from the UN Environment Programme(UNEP)finds that current pledges under the Paris Agreement put the world on track for a 2.5-2.9 degrees Celsius temperature rise above pre

29、-industrial levels this century.3But with every additional one-tenth degree of warming,the number and severity of climate eventscan be expected to rise,as will the financial and human costs.Comparing the average number of weather-related disasters in the 1970s to the 2010s,there was an almwost five-

30、fold increase4(see Exhibit 1).The increasing frequency and severity of extreme-weather events is compounded by population growthand economic development in high-risk areasdue to urbanization placing more people andeconomic activity in harms way.5Exhibit 1:Historical number of weather-related disaste

31、rs6Source:Oliver Wyman analysis based on“Our World in Data”3The adaptation and resilience gapADAPTATIONRefers to adjustments in ecological,social,or economic systems in response to actual or expected climatic stimuli and their effects.It refers to changes in processes,practices,and structures to mod

32、erate potential damages or benefit from opportunities associated with climate change.7RESILIENCEThe capacity of social,economic,and environmental systems to cope with a hazardous event,trend,or disturbance,responding or reorganizing in ways that maintain their essential function,identity,and structu

33、re while also maintaining the capacity for adaptation,learning,and transformation.8Increased investment in climate adaptation and resilience is an urgent priority.Demand for adaptation finance in developing countries is 10 to 18 times greater than official adaptation finance flows,resulting in a fin

34、ancing gap of$194 billion to$366billion a year.9 Globally,estimates suggest less than 2%of adaptation finance currently comes from private sources while around$3 trillion a year of investment in climate-resilient infrastructure is needed worldwide over the coming decade.10 That gap between supply an

35、d need must be closed,and mobilization of private capital will be a critical sourceof additional funding.In response,the UN Race to Resilience,launched in 2021 by the UN Climate Action High-Level Champions(HLCs),aims to increase the resilience of four billion climate-vulnerable people by 2030 throug

36、h targeted investment in adaptation solutions.The Sharm-El-Sheikh Adaptation Agenda,released at COP27,defines concrete adaptation solutions and outcome targets for Race to Resilience partners to achieve.Both specifically identify the insurance sector as a keyparticipant in scaling adaptation initiat

37、ives.11The unique role of the insurance industryArguably more than any other sector,the insurance industry is uniquely positioned to help close the adaptation and resilience gap.Insurers can:Support resilience by transferring risk from vulnerable communities and infrastructure,with evidence showing

38、economies with higher rates ofinsurance coverage recovering faster from climate-related shocks12,13 Encourage investment in resilience by informing policyholders,communities,and businesses about the level and nature of their risk exposure,and setting prices and terms to encourage risk-reducing behav

39、ior Apply their risk management and risk-modeling expertise to contribute to the creation of safer andmore resilient communities Advise infrastructure planning bodies on where particular risk exposures and points of vulnerability lie,allowing more resilient development and effective risk-aware plann

40、ing Enable investment in resilient businesses,infrastructure,and nature-based solutions using both sides of the balance sheet to channel capital and de-risk opportunitiesAlthough the adaptation and resilience gap is greatest in developing countries,it is a global issue.In developing countries,lower

41、incomes,lower-quality infrastructure,and reduced access to social protection and healthcare all contribute to insufficient levels of resilience.These countries also experience lower levels of insurance coverage because of limited product availability,poorly functioning distribution networks,and the

42、relatively high cost of insurance.More broadly,climate change threatens to trap populations in a vicious circle of increasing disasters and declining resilience.In developed economies,insurance penetration may be higher,but there are still many pockets of underinsured communities.With rising climate

43、-driven risks pushing the cost of coverage even higher,insurance becomes evenmoreunaffordable and unavailable over thelonger-term for these communities.Supporting adaptation and resilience in the face of climate change is not just an opportunity,but a commercial imperative for the insurance industry

44、.Without investment in adaptation and resilience,climate change may drive weather-related risks in certain regions to levels that are no longer insurable,eroding markets and shrinking profit pools.Thisisalready starting to happen,for 4example in the Western United States because of the threat of wil

45、dfires,and was a major driver for the establishmentof the Australian Reinsurance Pool Corporation to cover cyclones and cyclone-related flood damage.However,building resilience can do more than protect existing markets.It can unlock new ones by improving the insurability of underserved communities a

46、nd creating new business opportunities.Currently,only 46%of global weather-related losses are insured,equating to a$142 billion protection gap(see Exhibit 2).While this gap exists for a multitude of structural and socioeconomic reasons that cannot be solved by the insurance industry alone,insurers c

47、an pursue strategies that may help narrow the gap.By extending insurance to additionalcommunities,they can increase the proportion of losses covered by insurance,and by helping build resilience they can reduce the absolute losses that occur when disaster strikes.Neither of these are new ideas for th

48、einsurance industry,so the question we examine ishow to do more,and doitmore effectively.Private insurers are ultimately commercial entitieswith responsibilities to their investors.Soin this report,we set out a commercial agenda for the insurance industry to support the UN Race to Resilience.We esti

49、mate that,by pursuing this agenda,the industry can close up to 30%of the existing protection gap,presenting a$71 billion annual revenue opportunity for insurers while contributing to the resilience of millions of people.14Exhibit 2:Protection gap for weather-related losses15USD billion502

50、002503003504000201020202022Insured weather-related lossesTotal weather-related lossesInsurers can close this gap through the following resilience agendaSource:Oliver Wyman analysis based on Swiss Re Institutes Sigma publication from March 2023 titled“Natural catastrophes and inflation in

51、2022:Aperfect storm”5Purpose and summary of the reportThis report supports the UN Race to Resilience and theSharm-El-Sheikh Adaptation Agenda by addressing how insurers can undertake the vital work of scaling climate adaptation and resilience initiatives.The report draws upon research and perspectiv

52、es from experts across Marsh McLennan as well as the broader insurance industry.It builds on last years report,“Fulfilling a Legacy of Societal Risk Management,”which was released at COP27 by the High-Level Champions,Adrienne Arsht Rockefeller Foundation,and Marsh McLennan.16This years report seeks

53、to answer the following questions:What impact can the insurance industry have on climate adaptation and resilience if it were tooperate at its full potential?What barriers does the insurance sector face to work toward climate adaptation and resilience efforts?How should the insurance industry addres

54、s these barriers to accelerate and scale its impact?In the report,we outline the below recommendations:1.Prioritize resilience as a strategic imperative2.Collaborate with the public sector to expand coverage3.Improve accuracy and availability of climate-related data and analytics4.Create an industry

55、 standard around“build back better”5.Advocate for public policies and regulations that support resilienceWhile the primary audience for these recommendations is the private insurance industry including private insurers,reinsurers,andbrokerswe also hope to inform government bodies and regulators abou

56、t how collaboration with the industry can be a key enabler for insurers toplay agreater role in resilience.63.Barriers to the insurance industry playing a more widespread role in adaptation and resilienceWhile the insurance industry already plays an important role in climate adaptation and resilienc

57、e efforts,it could do a lot more.However,this requires overcoming a variety of internal and external challenges.As detailed in Exhibit 3,these fall into three categories:Demand-side constraints,supply-side constraints,and regulatory and policy constraints.Exhibit 3:Barriers to insurance industry sup

58、port of adaptation and resilienceSupply-side constraintsRegulatory and policy constraintsData and modeling capabilities not fullyinforming or supporting climate-related risksTraditional insurance policies not designedto incentivize system-level resilienceCost and logistical challenges with aggregati

59、on and distributionMoral hazard risk hindering insurance uptakeLack of awareness or understanding of climate-related risks and insurance benefitsUnaffordable coverageLack of public sector focus on risk reductionRegulations that restrict insurance efficacyBarriers which directly hinderadaptation and

60、resilienceBarriers(exacerbated by climate change)which indirectly hinder adaptation and resilienceDemand-side constraintsSource:Oliver Wyman analysis3.1.Demand-side constraintsIndividuals and businesses often lack awareness ofclimate-related risks and the benefits of insurance.Populations often do n

61、ot properly understand the extent to which they are exposed to climate-related risks.When combined with otherfactors such as low levels of financial literacy,mistrust of insurance,and behavioral biases such as anchoring(it hasnt happened before),optimism(it wont happen to me),or even the gamblers fa

62、llacy(itwont happen again),the result is insurance coverage insufficient to cover the ever-rising threatofclimate change.17,187Moral hazard hinders insurance uptake and risk mitigation.All traditional insurance schemes face a degree of moral hazard arising from the possibility that insureds do not u

63、ndertake risk reduction becausethe cost of a disaster will be borne by the insurer.However moral hazard is also particularly problematic when there is an expectation of government disaster relief.Although this can play an important role in helping affected communities recover,it can also haveseveral

64、 unintended consequences.The promise of a bailout may mean households and businesses decide not to invest in resilience,or pursue risky behavior,such as building on flood plains.People may also decide that private insurance is unnecessary because they are effectivelyinsured by the state.Risk-based p

65、ricing may result in unaffordable coverage for the most exposed communities.Coverage affordability is already a challenge in manyparts of the world.Climate change will exacerbate this problem,particularly for lower-incomepopulations that ascribe a disproportional percentage of their intergenerationa

66、l wealth to the equity in their homes.19 But the problem is not confined to lower-income groups.As climate change progresses,accumulations of concentrated exposure in wealthier but higher-risk areas threatens to push risk-based premiums beyond the reach of a broad base of existing customers,threaten

67、ing the stability and viability of insurance markets themselves.203.2.Supply-side constraintsData and modeling do not fully inform and support quantification and pricing of climate-related risks.To make informed decisions about where and how to invest in resilience,households,businesses,and governme

68、nts need access to reliable data in appropriate formats.However,this data is often not available,leading them to underestimate the degree of risk and the possible losses they face.Insurers may also confront data challenges that limit their ability to price risks and extend coverage.For example,in de

69、veloping economies,poor data on historical losses and asset vulnerability characteristics are a particular challenge in damage datasets.21,22 Anotherchallenge relates to the incorporation of the impact of resilience efforts into pricing models,so that insurers can properly reflect the benefits of re

70、silience in policy terms,and incentivize investment in risk reduction.One example of this is the recent focus on nature-based solutions(NBS),where the risk-reduction benefits of natural ecosystems are highly contextual and still being fully understood,and data and modeling capabilities are nascent.2

71、3 But this is also a challenge for more mainstream products such as home insurance,where insurers may struggle to capture the benefits of flood resilience measures in their models.Climate change brings additional modeling challenges.The catastrophe models insurers use fornatural disasters are often

72、anchored to historical datasets that may not represent the current climate,let alone the future climate.Although work is underway in many parts of the industry to develop climate-conditioned models,more work needs to be done before future climate scenarios are incorporated throughout industry models

73、 as a matter of course,and insurers can reliably quantify how portfolio risks are likely to evolve.The aggregation and distribution of insurance is challenging.Distributing insurance in underserved markets can be expensive.This is particularly acute in developing economies where distribution and ser

74、vicing costs can be prohibitive on a per policy basis relative to the underlying risk premium.In these cases,traditional distribution models may not be viable.More broadly,the historical model of distributing insurance on an individual,policyholder basis may be challenged by the systemic nature of c

75、limate-related risks.Communities could rather benefit from collective access to insurance via public-led enterprises and other mechanisms that centralize and aggregate policies and distribute to policyholders,reducing these per-policy administration costs.Traditional insurance policies are not desig

76、ned to incentivize system-level resilience.The long-8term nature of climate change does not align with the typical 12-month duration of an insurance policy.Ashort-term policy provides insurers with the strategic flexibility to reprice risks and steer their portfolios as climate change increases.Howe

77、ver,the flipside is that insurance struggles to provide clear climate risk signals to policyholders,as changes in climate risk occur beyond the contract term.24 Policy wording may also create problems for adaptation and resilience.For example,year after year,policies often include same site restrict

78、ions on structures that face repetitive damage and increasing climate-related risks,often prompting property owners to re-build without taking additional resilience-enhancing measures.253.3.Regulatory and policy constraintsGovernments favor disaster relief over disaster prevention.Investment in ex-a

79、nte risk mitigation provides a significantly better return than ex-post disaster relief.Yet governments routinely spend far more on the latter.One US study,which considered natural catastrophe losses from wind,floods,earthquakes,and fires,found that risk mitigation returns an average of$13 for each

80、one dollar invested.26 Despite this,analysis of the US Federal Emergency Management Agencys(FEMA)spending found only 14%was directed to risk mitigation,such as resilience-building programs.27 On a global basis,only 12%of disaster managementfunds have been dedicated to pre-disaster resilience,withthe

81、remainder going to post-disaster responseand recovery.28Aside from being an inefficient use of public money,the emphasis on ex-post disaster relief has more pernicious consequences by creating moral hazard.It discourages investment in risk reduction and encourages risky behaviors among households an

82、d businesses.It also crowds out private insurance,as households and businesses are less willing to buy insurance if they believe they will receive a bailout when disaster strikes.Furthermore,there is a much greater risk of wastage through fraud and inefficiency an audit by Americas Government Accoun

83、tability Office found that as much as$1.4 billion of the$6billion in federal emergency relief for victims of Hurricanes Katrina and Rita in 2005 went on improper or fraudulent payments.29 As a result,the opportunity to transfer risk away from the government balance sheet to private markets,and to be

84、nefit from their efficient payments and risk management processes,islost,and governments face a downward fiscal spiral as climate change increases ex-post disaster spending,further squeezing investment in resilience and leaving populations vulnerable to the next disaster.Certain policies and regulat

85、ions can undermine insurance efficacy.Insurance works best when the cost of cover reflects the level of risk.This price signal helps policyholders understand risk and incentivizes risk reduction and investment in resilience.Yet,in many countries,regulations inhibit price signals,either through restr

86、ictions on risk-based pricing,capson premium pricing,or restrictions on using certain models to price risk.30Regulations can also prevent insurers from using the full breadth of their capabilities to support resilience.Parametric insurance,which pays out according to pre-defined triggers,is particul

87、arly important for climate resilience as it pays out more quickly than traditional indemnity insurance and without restrictions on how funds are spent,allowing policyholders to recover faster.That said,parametric insurance is restricted in certain regions by requirements to show“proof of loss”to avo

88、id treatment as a financial derivative.31,32Other regulations around land-use planning and building codes can undermine resilience and insurability by encouraging(re)construction in high-risks areas,such as flood zones and wildfire areas,where risk will continue to increase with climatechange,or fai

89、ling to ensure that new buildingsare built to a standard able to cope withfuture climateimpacts.3394.A resilience agenda for the insurance industryBelow we set out a five-point agenda for how the insurance industry can build climate resilience and seize related commercial opportunities.As shown in E

90、xhibit 4,the five recommendations address multiple barriers,meaning that a concerted effort to pursue this agenda could unlock significant benefits and create mutually re-enforcing outcomes.For each of the recommendations to be successful,theinsurance industry will need to undergo something of a min

91、dset shift and expand its existing“toolbox”beyond traditional risk transfer,to embrace a range of solutions and services designed to build resilience and enhance adaptation.Exhibit 4:Mapping barriers to recommendationsLack of awareness or understanding of climate-related risks and insurance benefits

92、Cost and logistical challenges with aggregation and distributionTraditional insurance policies not designed to incentivize system-level resilienceLack of public sector focus on risk reductionRegulations that restrict insurance efficacyUnaffordable coverageData and modeling capabilities not fully inf

93、orming or supporting climate-related risks2Collaborate with the public sectorto expand coverage3Improve accuracy and availability ofclimate-related data and analytics4Create an industry standardaround“build back better”5Advocate for public policies andregulations that support resilience1Prioritize r

94、esilience asa strategic imperativeRecommendationsRegulatory and policy constraintsDemand-side constraintsSupply-side constraintsBarriers hindering adaptationand resilienceMoral hazard risk hinderinginsurance uptakeSource:Oliver Wyman analysis10RECOMMENDATION 1Prioritize resilience as a strategic imp

95、erativeCOMMERCIAL BENEFIT OF THIS RECOMMENDATIONMakingresilience a strategic priority enables insurers to expand their business and increase revenues via new products and distribution mechanisms that reach traditionally underinsured markets and assets.It also enables insurers to target initiatives t

96、hat will have the most impact on building resilience,ultimately driving down overall losses and protecting existing markets.By prioritizing resilience in near-term plans and defining an explicit resilience strategy,insurers can target areas of their portfolio that are most at risk,design products an

97、d broader initiatives to address many of the supply and demand barriers we identifiedearlier,and greatly improve the long-term viability of their business models.The current state of insurance climate strategyDespite the insurance industrys significant exposure to climate impacts and its unique posi

98、tion to benefit from increased climate resilience,the integration of adaptation and resilience into firm-wide strategy remains largely overlooked by most insurers and reinsurers,particularly when compared with the incorporation of emissions reduction and energy transition goals34(see Exhibit 5).A re

99、view of sustainability reports and climate-related financial disclosures from 20 global insurers and reinsurers revealed that 100%of this sample discuss decarbonization and the energy transition and 85%have established comprehensive decarbonization and energy transition targets spanning different ti

100、meframes.On the other hand,comprehensive acknowledgement of the role of climate adaptation and resilience and quantifiable metrics are much less common.While 80%of disclosures mention adaptation and resilience,this acknowledgment is often focused on philanthropy or broad,conceptual statements.Beyond

101、 philanthropy,only 10%of disclosures identify quantifiable adaptation and resilience targets.Within this 10%,targets are not necessarily comprehensive.They are also focused on short-term time horizons and lack the same level of robustness as corresponding carbon emissions and transition targets.In a

102、 separate review of publicly available materiality assessments from the same sample,88%of reports identified climate-related issues as a significant material risk in some capacity.However,only 35%specifically identified climate adaptation and resilienceas a top-priority material outcome.11Exhibit 5:

103、Insurer focus on adaptation and resilience as part of climate strategy35Qualitative discussionQuantitative targetsClimate risk identified,adaptation and resiliencenot identifiedClimate adaptation and resilience specifically identifiedNo climate-related issues identifiedEmissions andEnergy Transition

104、100%85%80%10%Adaptation andResilience5.1 Climate-related targets and initiatives discussed in sustainability disclosures5.2 Priority climate-related issues identified in materiality assessments12%53%35%Source:Oliver Wyman analysis based on publicly available(re)insurer sustainability disclosures and

105、 materiality assessmentsNext steps for the insurance industryThe following five key priorities will enable insurers to make climate adaptation and resilience a strategic imperative:1.Encourage uptake of resilient solutions among investors and communities to address the challenges faced by a shrinkin

106、g insurance sector.By facilitating meaningful dialogues and building a resilience narrative,insurers can promote the adoption of resilience initiatives in strategic decision-making.2.Engage clients to increase their involvement in system-level,risk-reduction initiatives in key geographies.This helps

107、 insurers better serve clients and contribute to climate resilience by advocating for collective action to tackle complex climate risks.3.Encourage proposition development to go beyond traditional risk transfer,through employee development and training in the importance and value of climate resilien

108、ce.These investments foster the behavioral change and human capital development necessary to adapt to evolving risks.4.Implement initiatives to better support climate resilience through the insights gained from risk assessment,for example,in the underwriting and claims processes.Insurers can provide

109、 valuable support to their clients,address specific risks in their portfolios,and capture commercial opportunities.5.Define time-bound,quantifiable,and reportable metrics and targets for adaptation and resilience initiatives.Defining success,in quantifiable terms,ensures accountability and can incen

110、tivize greater ongoing investment in resilience by measuring and acknowledging progress.Further,disclosures of these metrics can widen industry knowledge on the most successful initiatives.Insurers already have many of the tools needed to support resilience,so improvements do not necessarily require

111、 complex innovation.Insurers can refine existing products and distribution mechanisms and utilize their investment capabilities to expand coverage and thereby increase resilience.As part of their strategy,insurers can also indirectly increase resilience by insuring investments in resilience and enab

112、ling resilience-building projects.Exhibit 6 details examples of opportunities in which insurers can increase resilience directly and indirectly through enhanced product offerings,distribution mechanisms and portfolio management.Additional examples and detail can be found in the supplement at the end

113、 of this report.12Exhibit 6:Example opportunities for insurers to increase resilienceTYPEEXAMPLE IMPLEMENTATIONParametric insuranceProvides faster payouts to policyholders and enables quicker recoveryThe African Risk Capacity(ARC)pools climate-related risk from partner countries,who pay premiums for

114、 parametric policies.After events,countries and specific stakeholders like farmers quickly receive payouts.36Product OfferingsCredit insuranceProvides financial stability to resilience-building projectsThe Asian Development Bank and the International Finance Corporation both reached recent agreement

115、s with global insurers to mobilize co-financing capacity through credit insurance that unlocks financing for critical infrastructure projects,climate-resilience initiatives,and economic development in developing markets.37,38Climate-resilience consulting servicesSupports businesses and communities i

116、n understanding how to build resilience strategiesZurichs resilience solutions support clients in data collection,risk analysis,adaptation implementation,and climate-relatedreporting.39Improved distribution modelsUtilizes technology and collaboration with a range of public and private partners to mo

117、re effectively reach new markets and expand insurance coverage Blue Marble,a microinsurance provider,created affordable parametric crop insurance to coffee farmers in Colombia.Blue Marble connects with local coffee growers through their partnership with Nespresso,who co-finances the premiums along w

118、ith the Colombian government,with the ultimate objective of integrating the full cost into the products themselves,producing a more resilient supply chain.40,41 BIMA,a licensed insurance intermediary,uses a mobile platform to provide insurance to developing markets,automatically deducting premiums f

119、rom prepaid airtime credit and paying out claims within 72 hours.42 Amwins,a wholesale broker,offers a“Shake and Pay”parametric earthquake insurance product,with an online platform that can provide affordable coverage to Californiansin minutes.43Distribution MechanismsDirect investments in resilienc

120、eReduces likelihood of future losses via investment in structural improvements,more resilient infrastructure,or nature-based solutionsThrough investments in nature-based solutions,insurers can support projects taking place in their market to build community resilience(see case study below for more d

121、etail).Portfolio ManagementSupport of resilience projects through the carbon marketProvides funds and backing for resilience projectsInsurers can buy carbon credits that fund resilience projects.They can also provide coverage for purchasers or producers of carbon offset projects,which supports the f

122、easibility of nature-based solutions and expands the carbon offset market(seecase study below for more detail).Insurance-linked securitiesLeverages catastrophe bonds and resilience/green bonds to transfer risks,diversify portfolios,and fund resilience projects and products New York Citys Metropolita

123、n Transportation Authority(MTA)covered its infrastructure by issuing parametric catastrophe bonds after Hurricane Sandy,which distributes payouts if astorm surge floods subways.44 Green bonds and resilience bonds have been integrated into the investment strategies of major insurers to support sustai

124、nable infrastructure and risk mitigation initiatives.Source:Oliver Wyman analysis13InfrastructureInsuring and investing in infrastructure presents a large opportunity to reduce the impacts of disasters,increase resilience,and support the continued delivery of emergency services during crises.However

125、,there has historically been under investment and underinsurance of assets such as public transportation,electric utilities,and hospitals.The Sendai Framework,which is endorsed by the UN as the first major agreement for development and disaster risk reduction,outlines a target“to substantially reduc

126、e disaster damage to critical infrastructure and disruption of basic services,amongthem health and educational facilities.”45To reduce the disruption of services,insurers can encourage more widespread adoption of infrastructure insurance.Parametric products,which provide quick payouts to policyholde

127、rs and enable more efficient recovery,have been used to successfully insure hospitals during pandemics and can be used in a similar way to insure hospitals against weather-related disasters.Insurers can also support building more resilient infrastructure,specifically in developing economies,with cre

128、dit insurance.As highlighted in the above table,the Asian Development Bank(ADB)and the International Finance Corporation(IFC)reached agreements in 2022 and 2023,respectively,with several global insurers to increase credit insurance for critical infrastructure.46,47On the portfolio management side,ca

129、tastrophe(CAT)bonds can be issued to fund infrastructure improvements post disaster.For example,the Metropolitan Transportation Authority(MTA)issued a CAT bond to invest in resilience of transportation after Hurricane Sandy.The MTA has since renewed the bond three times,which operates based on param

130、etric storm and earthquake triggers.48 Insurers can also directly invest in infrastructure to improve its likelihood of withstanding disaster.For example,the Insurance Development Fund(IDF),World Bank,and the United Nations(UN)are currently partnering to develop an infrastructure fund to support inv

131、estments in resilient infrastructures in developingeconomies.49AgricultureCrop insurance is vital to stabilize supply chains and improve the livelihoods of farmers,who are particularly vulnerable to climate-related risks.Globally,one in four people works in agriculture,and farmers make us most of th

132、e workforce in manydeveloping countries.50Yet 60%of insurable crop production globally was unprotected in 2022,representing a$113 billion crop protection gap.51 In Mexico,agriculture constituted more than 80%of total economic losses from weather-related disasters over the last two decades.52The case

133、 studies below highlight ways that insurers have used a combination of product refinement,newdistribution mechanisms,and portfolio management to create new commercial opportunities.14The insurance industry has an opportunity to protectfarmers,as well as the world population that relies on crop produ

134、ction,while incentivizing climate-smart agriculture to provide more resilience to farms.Insurers can tap into new products and distribution methods and work with private and public partners to increase coverage of agriculture.For instance,Blue Marble,a microinsurance provider,increased the coverage

135、and resilience of coffee production via the distribution of a parametric product to coffee farmers through its partnership with Nespresso,aprivate company,as well as government bodies.53,54 In addition,SwissRe launched a weather-index coverage program for smallholder white-maize farmers in Mexico in

136、 partnership with the Insurance Development Forum,Mexicos Ministry of Finance,and state-owned re-insurer Agroasemex,covering against excessive rainfall,droughts,and other naturaldisasters through a parametric policy.55Nature-based solutionsNature-based solutions(NBS)are investments that protect natu

137、ral ecosystems and build resilience against climate change.Natural ecosystems such as coral reefs,mangroves,and salt marshes reduce the severity of climate disasters,capture greenhouse gases,and provide other socioecological benefits.NBS can provide more than 30%of the climate mitigation needed to l

138、imit global warming to the 2015Paris Agreement targets,given that these assets are between five times and ten times more effective than human-engineered solutions.56,57 By investing in these solutions in areas where they are also active in providing cover,insurers can not only create a positive impa

139、ct on total emissions,they can also reduce risk over time for themselves and other insurers.This creates a positive feedback loop that reduces long-term costs and enables the industry to maintain or expand coverage.58 This is an example of a shift in thinking breaking down business silos and focusin

140、g on prevention and resilience as much as post-event cash transfer that can reduce payouts over the longrun and protect ecosystems that provide long-term resilience.Incorporate nature-based solutions in risk modelingand dataTo increase the focus on NBS,risk modeling and data need to be expanded.By m

141、easuring the quantitative benefits of NBS and incorporating this into risk models,insurers can identify where NBS solutions willenhance product offerings,pricing,and investments.One study found that investment in coral reef protection could be recovered from premium savings in the first five years.5

142、9 Once the long-term benefits of NBS are more defined and incorporated into the data and models,insurers can capitalize more widely on NBS opportunities to both invest and insure.Expand insurance of nature-based solutionsInsurers can directly cover ecosystems in collaboration with communities,govern

143、ments,and non-governmental organizations(NGOs).This provides an opportunity to expand private insurance business,while receiving the benefits from resilience.In Mesoamerica,insurers have collaborated with the public sector to underwrite parametric policies and insure coral reefs against hurricanes.S

144、wiss Re,The Nature Conservancy,and regional Mexican government insured the Quintana Roo coral reef through parametric insurance.60 The MAR Fund also created parametric insurance products for several countries in the region:After Hurricane Lisa in November 2022,the first payout helped fund restoratio

145、n of the affected area in Belize.61 These insurance policies help protect natural assets and create funds for repair after disasters.15HARNESSING CO-BENEFITS OF INCREASING RESILIENCE AND SUPPORTING CARBON REMOVALIn addition to direct investments in resilience,insurers can also indirectly encourage r

146、esilience through the voluntary carbon market(VCM).Carbon credits or offsets,which are traded in the VCM,represent one metric ton of carbon dioxide or another greenhouse gas that has been removed,reduced,or avoided.These are often bought by businesses to offset their own CO2 emissions.These offsets

147、are often derived from dedicated removal projects such as a reforestation effort or mangrove restitution.The VCM funds nature-based solutions and other projects that can build community resilience.However,the carbon market faces several challenges,including a lack of regulatory support,incomplete pe

148、rformance data,and credibility concerns.The insurance sectors risk expertise can provide greater certainty around delivery and accuracy of carbon credits,therefore driving market growth.1.Expand insurance product offerings to cover carbon offsets against fraud,mismanagement,or damageInsurers can cov

149、er non-delivery or reversal of carbon stocks,including losses from regulators invalidating offsets,project mismanagement,fraud,or unexpected changes.Additionally,insurers can provide policies to ecosystem projects to protect losses from natural disasters and other failures.By insuring carbon offsets

150、,insurers make resilience projects more feasible.2.Use risk assessment expertise and tools to help develop voluntary carbon market standards,reliability,and integrityThe insurance industry is well-positioned to standardize offsets by improving transparency and credit quality.They can do this by asse

151、ssing carbon project risks to identify projects that manage and mitigate risks better,providing smaller-scale suppliers with access to nature-based carbon credits in conjunction with insurance,and creating tools to improve legitimacy of the VCM.Bybuilding these insurance capabilities for nature-base

152、d offsets in carbon markets,insurers can improve offset pricing,allocate risk-bearing capacity,grow the market,and scale carbon project access.Insurers can also provide policies for projects that may protect a natural asset.For example,Swiss Re supported a Construction All Risks(CAR)policy to create

153、 a sand dyke in the Netherlands to protect an island labeled as a World Heritage Site.62 This applied traditional insurance to an innovative project that supports NBS.Nature-based solutions do not just provide ecosystem services they can also be sites for tourism and other income.Businesses and comm

154、unities can use revenue from ecosystems to buy insurance for extreme weather that might cause ecosystems like national parks,beaches,and coral reefs to close to visitors,resulting in lost revenue.This enables insurers to apply traditional insurance policies to new situations.Investing in nature-base

155、d solutionsInsurance companies can take advantage of investing in NBS implementation to diversify their portfolios and reduce risk of their policies,while earning attractive risk-adjusted returns,for example,through the monetization of attaching carbon credits.One survey of insurers found that insur

156、ers can fund NBS through green,resilience,and CAT bonds.63 These bonds help raise capital for NBS projects andprovidefinancial returns to insurers.Insurers can also donate money to local initiatives that increase resilience.Fifteen Canadian insurance companies developed the Nature Force and invested

157、 in watershed resiliency through natural infrastructure by partnering with the nonprofit Ducks Unlimited.Whether its through issuing bonds or providing philanthropy to NBS,this helps reduce the severity of climate-related disasters,lowers overall risk,and allows insurers to maintain or expand curren

158、t coverage.16RECOMMENDATION 2Collaborate with the public sector to expand insurance coverageCOMMERCIAL BENEFIT OF THIS RECOMMENDATIONPartnering with the public sector,including government bodies,non-profits,or other community organizations,allows insurers to cover new markets and increase revenue in

159、 areas where private insurance on its own may be unaffordable or challenging to distribute at scale.Partnerships can also protect existing insurance markets and revenues in light of increasing climate-related risks by utilizing public sector funding and encouraging risk mitigation and riskdiversific

160、ation to keep coverage affordable.Designed well,public-private partnerships can help extend insurance cover to vulnerable,underserved communities.These partnerships are likely to become an increasingly important part of the insurance toolkit as climate change increases risk accumulations and the cos

161、t of cover in high-risk areas,and the evidence shows that such partnerships can deliver higher levels of insurance penetration among the general population than with private markets alone.64For insurers,public-private partnerships can provide access to underserved communities and protect existing ma

162、rkets from climate-driven premium inflation.For governments,these partnerships provide much needed private capital for vulnerable communities and prevent a spiral of increasing inequality in which poorer communities face greater disaster costs.More broadly,these partnerships address the challenge of

163、 relying on government intervention post disaster,contribute to overall speedand extent of economic resilience and recovery,and help reduce fraud and leakage fromgovernment post-disaster relief schemes.Public-private partnerships vary in size,ranging in scale from sovereign risk pools where national

164、 governments pool catastrophe risks for the private sector to transfer to reinsurance markets to national,regional,and community-based schemes.They also come in many different forms.Public and private actors can take different roles along the insurance value chain as illustrated in Exhibit 7,dependi

165、ng on the specific requirements ofthe scheme.As the need for collaboration increases,insurance brokers can also play an important role in working with communities,private insurers,and governments to aggregate demand and create products at scale.Brokers are well-positioned to identify best practice a

166、pproaches and create repeatable adaptation and resilience schemes that can be implemented and adapted across different regions.Exhibit 7:Insurance value chainUnderstand target policyholders and risk;determine product structure,stakeholders,and featuresProvide advice,sale,and servicing to policyholde

167、rsAnalyze actuarial data,perform modeling,and price schemeManage administration,including billingEvaluate andsettle claimsRecover funds and manage coverageSales anddistributionClaimsmanagementRiskunderwritingOperationsReinsuranceProduct designand marketingSource:Oliver Wyman analysis17Design princip

168、les for public-private partnershipsGetting the design of public-private partnerships right is vital.Poorly designed partnerships can result in high operating costs,muted price signals that fail to optimally incentivize risk reduction,crowding out of private insurance,and the poor allocation of risks

169、 or unsustainable contingent liabilities on the public balance sheet.The following principles ensure public-private partnerships effectively expand insurance,remain sustainable in the long-term,and employequitable practices.1.Maximize the role of private insurance.Maximizing private insurance reduce

170、s contingent liabilities placed on the public balance sheet,ensures the expertise of the private insurance market is brought to bear on risk assessment and mitigation,enables risk-based pricing,and utilizes the insurance industrys fraud prevention and claims payments capabilities.The public sector c

171、an still have a role in providing contingent funding,risk capital to reduce costs for vulnerable communities,or supporting equitable pricing and access to insurance.However,approaches should be designed carefully to ensure subsidies do not extend to those who can afford risk-based premiums in the pr

172、ivate market unless that is an explicit objective of these partnerships.2.Strike a balance between risk-based pricing andaffordability and access.Subsidizing insurance can help extend cover to vulnerable populations but may lead to unintended behavioral consequences.Muted pricing signals may reduce

173、incentives to invest in resilience or contribute to high-risk activities such as building in flood plains,which can increase the cost of risk over the long term.Cross-subsidies from one customer segment to another should also be avoided for the same reason.In many countries,subsidy costs will rise a

174、s a result of climate change and population growth,but withdrawing subsidies may be politically difficult,especially where the gap between market prices and subsidized prices is high.Governments need to understand the fiscal implications of public-private partnerships under plausible demographic and

175、 climate scenarios from the outset.3.Build public-private partnerships around the expertise of each entity.Different public and private entities have different risk bearing capacities,risk appetites,distribution networks,and technical expertise.Private insurers are often best placed to underwrite ri

176、sks and distribute and service policies in areas with already high insurance penetration.Governments may be better suited to carrying less-well-understood risks or supporting mechanisms such as back stops or blended finance to improve affordability for vulnerable communities.IDF,UNDP,AND BMZ TRIPART

177、ITE PROGRAM65The Tripartite Program is a public-private partnership between the United Nations Development Program(UNDP),the German Federal Ministry for Economic Cooperation and Development(BMZ),and the Insurance Development Forum(IDF).Since 2019,the partnership has worked with governments and other

178、 sub-national entities around the world to expand insurance coverage and resilience through 22 projects in climate-vulnerable countries.Examples of projects include a$50 million flood parametric program in Ghana,a$100 million drought parametric program in Mexico,and a$50 million urban flooding progr

179、am in Lagos,Nigeria.The Tripartite Program is an example of using the public-private partnership model for innovation and experimentation public-private partnerships do not have to be confined to traditional risk transfer.For the program to be successful,it has relied on each entitys unique technica

180、l expertise and risk capabilities.For instance,the UNDP provides country-level change through engaging countries,supporting regulations,integrating solutions,and providing project management support.BMZ mobilizes financial support through co-financing with the private sector and structures programs.

181、The IDF members deliver technical support(including risk modeling),risk transfer solutions,additional financing,and risk capacity.184.Incorporate resilience measures into insurance policies.To be economically sustainable in the face of climate change,public-private partnerships mustfind ways to buil

182、d resilience among high-riskpopulations.Examples include premium discounts for risk mitigating efforts,grants or loans to support risk mitigation,or investments in nature-based solutions and other physical resilience-building infrastructures.Not all risk mitigation results in the same benefit depend

183、ingon the specific peril,risk mitigation may result in a smaller or larger reduction in loss over time.Governments should consider different returns on mitigation when forming thesepartnerships,specifically in multi-peril countries.5.Maximize diversification and uptake.Public-private partnerships de

184、signed to increase affordability and extend insurance coverage should seek to pool risks over large areas and across high and low-risk policyholders to maximize diversification.Ways to do so include multi-peril schemes,national and transnational pools,and partnerships that serve both high-risk and l

185、ow-risk policyholders.Selected case studiesWe illustrate the range of objectives and designs across insurance-related public-private partnerships with the following three successful examples:The first example is Flood Re,a national UK government and private insurance industry collaboration that prov

186、ides a reinsurance scheme for insurers that offer flood coverage.It was created in 2016 as a temporary 25-year solution to address a market failure triggered by the withdrawal of insurersfrom the UK home insurance market.66A second example is the California Earthquake Authority(CEA),which developed

187、a Wildfire Fund in 2019 with the goal of lowering the risk of and damagesfrom utility-caused fires.The Fund reimburses three large utility companies for liabilitiespost-wildfire damage.67The Kenya Livestock Insurance Program(KLIP)is the final example.The KLIP is a collaboration launched in 2015 betw

188、een the government of Kenya and local insurers that is geared to help small farmers deal with the loss of livestock in the face of drought.Theprogram currently pays out premiums for up tofive animals.68Exhibit 8 describes how these public-private programs are designed across the across the above pri

189、nciples.19Exhibit 8:Examples of how existing partnerships are designed across the above principlesFlood Re69,70,71,72California Wildfire Fund(CEA)73,74,75,76Kenya Livestock Insurance Program(KLIP)77,78,79DESIGN PRINCIPLESThe government developed the scheme.It provides some oversight but no official

190、backstop.Flood Re allows the private sector to continue operations directly with policyholders as usual,with the public sector operating in the background.California Earthquake Authority(CEA)administers the California Wildfire Fund.The state of Californias Surplus Money Investment Fund(SMIF)provided

191、 an upfront loan for the fund.Guy Carpenter was selected to provide reinsurance and risk transfer advisory services.The government developed the program and provides oversight;Seven local insurers and one reinsurer distribute scheme and handle claims.The scheme-created protocols identify vulnerable

192、households that qualify for subsidized coverage.Maximize role of private insuranceThe scheme currently emphasizes affordability,with policyholders paying premiums based on tax bands.Subsidization is funded by a levy that insurers pass onto policyholders as part of their policies.However,Flood Re was

193、 created as a temporary solution set to expire in 2039,and insurance will aim to return to risk-based pricing.Utilities contribute different amounts to the fund depending on a variety of risk-based factors,including the number of people served and the proportion of the utility in high fire-threat di

194、stricts.The CEAs Director of Finance determines allocation amounts for each utility and can adjust based on any mitigation measures.These contributions make up 50%of the fund;the State of California contributes the other 50%through a utility tax from a water bond.Although KLIP currently subsidizes p

195、remiums,it will transition to fewer subsidies in phase two of the program,where policyholders will pay an increasing share of the commercial cost of insurance.Strike a balance between risk-based pricing and affordabilityPrivate insurers and the government collaborated to create the scheme.Flood Re i

196、s accountable to the Secretary of State.Private insurers handle individual underwriting and claims as well as all communications with policyholders and brokers.Experts from Filsinger Energy Partners and Guy Carpenter support pricing.Sedgwick Claims Management Services assists with claims.The World B

197、ank assisted with technical assistance.The program relies on the local insurers for risk information and access to distribution networks.Build partnerships around the expertise of each entityFlood Re educates policyholders on“flood smart”measures and reimburses“build back better”investments up to 10

198、,000.There is an emphasis on resilience to drive down overall risk and return to risk-based pricing in 2039.Each corporation is required to invest$5 billion in mitigation activities and upgrades across infrastructure and safety.The World Bank also approved the Kenya Climate Smart Agriculture Project

199、(KCSAP)to support the governments investment in resilient public goods through agriculture.Incorporate resilience measures into insurance policiesInsurers cover all properties,including those not in high-risk flood zones.This allows insurers to cross-subsidize higher-risk and lower risk-property pre

200、miums.Because this partnership is focused on three utility companies within California only,there is less opportunity to diversify risk.However,the fund diversifies risk through global reinsurance at its onset in 2019.Additionally,by providing assistance for wildfire recovery,the CEA allows private

201、insurers to better support recovery fromother perils.The KLIP focuses on drought in a specific region,limiting the opportunity to diversify risk.Maximize diversification and uptakeSource:Oliver Wyman analysis20RECOMMENDATION 3Improve accuracy and availability of climate-related data and analyticsCOM

202、MERCIAL BENEFIT OF THIS RECOMMENDATIONImproving data and analytics allows insurers to more accurately price risk and expand coverage to new markets and products where data is traditionally lacking,leading to increased revenues.Ensuring that models can incorporate resilience efforts will also enable

203、insurers to quantify risk reduction efforts,averted losses,and co-benefits.Insurers have a strong incentive to better understand climate changes impact on the data upon which they base their pricing and coverage.The ability of insurers to assess and underwrite risk has been complicated by the hard-t

204、o-assess changes in the assumptions about the likelihood and severity of natural catastrophes.Insurers struggle with the lack of necessary data and information and uncertainty about what is driving underlying risk distribution changes.There is a need for more forward-looking,“climate-conditioned”mod

205、eling capabilities to assess risks over the short and midterm.Understanding the impacts of rapidly changing risks not only reduces the necessary“uncertainty premium”built into pricing and reserving,it is also critical for the insurance industry to support adaptation and resilience.Data sharing throu

206、gh utilities and open dataInvestment in data-sharing utilities will support the resilience of individuals and assetsAccess to high-quality data is crucial for insurers to make well-informed decisions,as it directly impacts the accuracy of pricing and planning,and the amount and level of coverage the

207、y can provide to individuals,communities,and commercial enterprises.By improving data,insurers can enhance the precision ofrisk analytics and strengthen the insurance sectorsability to support and enhance resilience efforts and drive adaptation.Data-sharing utilities or open data can expand data ava

208、ilability,widening the collective information available to an individual insurer or broker.Addressinginformation silos and fostering a more comprehensive understand of risk enables insurers todevelop more robust insights through more informed models and analytics.Additionally,data sharing can suppor

209、t the development of new products and schemes that enhance adaptation and resilience,such as parametric policies.Enhanced understanding of exposure helps to safeguard insurers and risk owners from economic losses,given that patterns of risk accumulation change over time.This is particularly crucial

210、in regions where data availabilityis limited.Data utilities,including partnerships,marketplaces,and trusts,are increasingly gaining traction within insurance ecosystems,with different initiatives emerging to bridge information gaps and achieve collective goals in multiple sectors(see Exhibit 9).Thes

211、e platforms aim to enhance data collection and access by promoting collaboration,co-development,and the use of data standards,providing stakeholders with broader access to data and/or models compared to proprietary platforms or individual vendors.The success of opensource platforms in the industry a

212、lso relies on the crucial support and engagement from major modeling vendors and insurance corporations.The Insurance Development Forum(IDF)has produced a substantial amount of research on opensource platforms and their success in expandingrisk analytics capabilities to climate-vulnerable communitie

213、s.The IDFs Global Resilience Index Initiative(GRII),to be launched at COP28,aims to develop a common risk data architecture and provide reference data to improve understanding of climate risks,supporting climate resilience finance in both emerging and developed markets.80,81 Further,the IDF Risk Mod

214、eling Steering Group(RMSG)has developed initiatives,such as the Global Risk Modeling Alliance,which provides open data and modeling technology like the Oasis Loss Modeling Framework(see Exhibit 9)to support risk analytics development inparticipating countries.82Improving information granularity will

215、 produce more accurate risk assessmentsAccessing exposure and vulnerability information is one of the key challenges that hinders insurers ability to effectively price and provide coverage 21for risks.Data availability and accuracy can vary,integration of information from different sources can be di

216、fficult,and often the sensitivity of this information can require additional time and technological infrastructure to securely incorporate this information.However,primary property characteristics,secondary modifiers,and mitigation investments can significantly influence risk outcomes.Foundational i

217、nformation produces a base modeled loss calculation and includes the location of the risk and primary characteristics such as construction type and year,number of stories,and square footage.Secondary modifiers such as the roof envelope and cladding type,proximity to other structures,and any mitigati

218、on or resilient investments implemented may be critical for accurate risk assessment.Both primary and secondary characteristics may be fragmented and isolated within and between stakeholders in the insurance ecosystem.Data utilities can play a vital role in enhancing the availability,exhaustiveness,

219、andprecision of necessary data.Exhibit 9:Examples of Data Utilities and Opensource Software PlatformsOASIS HUB AND OASIS LOSS MODELING FRAMEWORK83Stakeholders:Catastrophe(re)insurance industry;modeling vendors;research organizations;governments Oasis Hub is a non-profit digital platform that aggrega

220、tes and standardizes global datasets on natural catastrophes,extreme weather,climate change,and other environmental risks.It includes the Oasis Loss Modeling Framework(LMF),an open-source platform for developing and deploying catastrophe models,and the Climate Change Risk Explorer(CCRE),which provid

221、es access to climate change data.A steering committee of 16 major insurers or insurer-led organizations guides the development of Open Data Standards(ODS)requirements under which Oasis operates.Oasis LMF was used to develop risk models in Bangladesh and the Philippines,where insurance uptake is less

222、 than 1%in both locations,through a 2-year project initiated by the German governments International Climate Initiative.The project involves collaboration with national scientific agencies and academic organizations,creating capacity for private insurers to enter the market and eventually own risk a

223、ssessment and management in the long term.84,85CLIMADAStakeholders:Catastrophe(re)insurance industry;global risk owners The success of CLIMADA,an open core risk modeling software platform,exemplifies the potential benefits of evaluating mitigation measures through models.The system operates under th

224、e Economics of Climate Adaptation(ECA)framework to provide concrete recommendations for clients to address climate-related risks over various time horizons.86 In partnership with Swiss Re,CLIMADA helped the San Salvador municipal government prioritize flood,tropical storm,and landslide adaptation in

225、vestments by ranking potential projects and quantifying the estimated losses they would prevent.87 The study resulted in the strengthening of the ecosystem through reforestation and terracing efforts.88OPENQUAKE AND THE GLOBAL EARTHQUAKE MODEL(GEM)FOUNDATIONStakeholders:Industry participants;modelin

226、g vendors;research organizations;governments Operated by GEM,OpenQuake is an opensource platform for scenario and probabilistic hazard risk assessments and includes modeling capabilities for any spatially varying hazards.89 In 2016,OpenQuake and Air Worldwide collaborated on a project(sponsored by t

227、he World Bank)with local experts in the Republic of Armenia to develop a national earthquake hazard model and seismic zonation maps,used to update national building codes and provide analytics to inform the countrys risk financing strategy.90 Similar platforms can be developed for climate-related ha

228、zards.Source:Oliver Wyman analysisChallenges and considerationsThe successful adoption of data utilities relies on trust and participation from data contributors,ensuring that the shared pool of data benefits all stakeholders rather than serving the interests of a single firm seeking a competitive a

229、dvantage.At the same time,private insurers and other actors should have their commercial interests protected,for example if they have invested resources in building a data advantage over many years.Utility development also requires careful consideration of factors such as oversight,22the number of i

230、nvolved actors,privacy and security measures,and the necessary infrastructure and technical capabilities.Standardization is also critical in integrating collected data,especially when global stakeholders contribute to exposure databases.Establishing standard terminology,definitions,and consistent re

231、quirements for data classification and management unlocks the full market potential of data utilities in the industry.Forward-looking models that account for different climate scenarios and timescalesDespite recent advances in analytical and technological capabilities,a significant gap remains in fu

232、lly incorporating climate-driven risks into catastrophe models.Failure to understand and integrate the impacts of climate change into catastrophe models can expose insurers to financial risks and limit their ability to manage climate-related risks,allocate capital effectively,and communicate risk in

233、formation to communities and stakeholders.Current“climate-conditioned”catastrophe models have limitations.Most adjust the frequency and severity of events based on historical data,which precludes the inclusion of new events possible in different climate scenarios.Being largely statistical rather tha

234、n driver-based models,these adjustments often fail to capture the complex and dynamic changes associated with catastrophe events.Moreover,they often lack the ability to incorporate mitigation and resilience measures,resulting in distorted vulnerabilityrisk information.91Modeling the impacts of clima

235、te change on weather-related perils has emerged as a critical focus for industry stakeholders and researchers alike.In the US,the National Oceanic and Atmospheric Administration(NOAA)and the National Science Foundation(NSF)are collaborating to establish an Industry-University Cooperative Research Ce

236、nter that aims to develop innovative models that seamlessly integrate climate projections into catastrophe models.By doing so,it seeks to improve the accuracy of the insurance sectors risk assessments and bolster its capacity to manage and mitigate climate-related risks.92It will be difficult to res

237、olve these issues and facilitate amore accurate assessment of climate change risks and possibilities with current modeling approaches;new modeling methods must be adopted.Thebelow three priorities can support more climate-ready models:1.Simulate events at climate-relevant timescales.By utilizing new

238、 event sets simulated from the latest climate models and modeling these across extended time horizons,more robust and forward-looking baseline datasets can be established.This enables accurate pricing for typical policy periods of 12 months,informs medium-term portfolio management decisions,and can

239、shape the long-term firm strategy for the coming years and decades.Additionally,models that incorporate changes in vulnerability risk,specifically risk reduction and resilience measures,produce more accurate views of risk and can incentivize further investment in resilience and adaptation through ri

240、sk-reflected pricing.2.Support scenario analysis and stress tests of different climate pathways.Scenario analyses and stress tests,commonly identified by the IPCCs Representative Concentration Pathways,must be conducted within and across models to provide a comprehensive view of the spread of risk u

241、nder different climatic conditions and the corresponding implications for their portfolios.Adaptation and resilience building efforts need to be more accurately included in climate scenario analysis and stress testing.This brings to the fore the value from resilience-building efforts across scenario

242、s and facilitates astrategic approach to incorporatingresilience intoportfolio steering.3.Incorporate the impact of secondary perils.Secondary perils such as severe convective storms,flash floods,drought,and wildfire,are highly climate-sensitive and increasingly impactful.93,94 In accordance with wi

243、der risk distributions,secondary perils accounted for 43%of natural catastrophe insured losses in 2022.95 These risks must be a key focus of modeling capabilities in current and future development cycles.23RECOMMENDATION 4Create an industry standard around“build back better”COMMERCIAL BENEFIT OF THI

244、S RECOMMENDATIONEnsuring that buildings are better able to withstand weather-related disasters can significantly reduce future financial losses and claims payouts.This makes the price of coverage more affordable for policyholders and keeps risk at a level where insurance can remain available and ins

245、urers can remain active in markets,despite increasing disaster frequency.“Build Back Better”(BBB)is defined by the United Nations Office for Disaster Risk Reduction as“the useof the recovery,rehabilitation and reconstruction phases after a disaster to increase the resilience of nations and communiti

246、es through integrating disaster risk reduction measures into the restoration of physical infrastructure and societal systems,and into the revitalization of livelihoods,economies,and the environment.”BBBs goal is to enable communities to better manage future disaster risks by improving the reconstruc

247、tion process through ensuring new development is located outside of high-risk areas and requiring that buildings and infrastructure can structurally better endure disasters such as flooding,earthquakes,and fires.96 BBB has additionally been used to drive the use of more sustainable materials in the

248、rebuilding process,embedding a resilience mindset and minimizing the carbon footprint of rebuilding.The benefits of taking the resilience of buildings and infrastructure into account are indisputable.BBB increases resilience to future disasters and reduces the potential for future losses by focusing

249、 explicitly on risk reduction throughout the rebuilding process.Without a focus on resilient construction,communities and regions may suffer further from avoidable damage and loss of life.With the 2004 Indian Ocean Tsunami,2005 Kashmir Earthquake in Pakistan,and the 2009 Samoan Tsunami,the degree of

250、 damage and loss of life could have been reduced if there had been greater consideration of risks during the design and construction of buildings and infrastructure.97 These are only a handful of select examples this theme is apparent and repeatable across disasters throughout the 2000s.Data has als

251、o shown that stronger buildings and infrastructure significantly reduce financial losses and costs from natural disasters.For example,51%of homes built after 2008 survived undamaged after Californias 2018 Camp Fire wildfire,the deadliest and most destructive in the states history.That compares with

252、18%of homes built pre-2008 under less-stringent building codes.98An analysis by the World Bank suggests that if all countries were to adopt BBB practices over the next 20 years,global losses from disaster would be reduced by 12%,or$65 billion a year.This reduction is most noticeable in some developi

253、ng economies,where the resulting loss reduction could be over40%.99Given the significant savings and increase in resiliencethat can come from building back better,not to mention the reduction in injuries and fatalities,it is understandable that there has been an increased focus on this idea over the

254、 past two decades.Obstacles to build back betterMany existing efforts are led by the public sector witha heavy burden on public funding,and do not involve private insurers.As stated in the barriers section of this report,there is a lack of public emphasis on resilient construction,and programs like

255、FEMA and the NFIP in the United States tend to allocate the majority of funding towards post-disasteractivities that do not support resilience,suchas rebuilding to the same standards and in the same high-risk locations.100,101 Insurers are typically not involved early enough in planning and reconstr

256、uction to meaningfully support BBB initiatives.In addition,insurers face difficulties fully implementing BBB with their current policy structuresand wordings,and incorporating benefitsof resilienceinto underwriting.24BBB is particularly relevant to insurers given their position in funding recovery.T

257、he Global Federation of Insurance Association recommends that,for recurring disasters to be avoided,“identical reconstruction after a natural disaster should not be the default.”102 Whileinsurers have done a lot of thinking on this topic,BBBs execution remains siloed across the industry and lacks a

258、consistent standard.This raises a further impediment to insurers adoption of BBB measures on an individual basis,namely that the future benefits by way of reduced incidence and severity of losses may not accrue to the sponsoring insurer.Because insurance is overwhelmingly a 12-month cover,customers

259、who have benefited from BBB in the claims processes of one insurer are free to switch to another insurer at any time.This moral hazard is best addressed by a combination of industry-wide adoption of a BBB standard,and incorporating fully risk-reflective pricing so that the sponsoring insurer can pri

260、ce to reflect their better understanding of the reduced risk exposure.Next steps for the insurance industry The resilience of buildings and infrastructure to withstand disasters,the standards associated with new developments,and the location of new developments are directly related to the degree of

261、damage and severity of losses for insurers.Overtime,this impacts the level of risk across regions,and subsequently the price of premiums and the affordability of coverage.BBB is one tool that will enable insurers to remain in more resilient markets and continue to provide coverage over the long-term

262、.Insurers have an opportunity to play a larger role in making BBB the industry standard enabling the private insurance market to collectively benefit from resilience measures and reduced risk.It should also be noted that insurer involvement can and should go beyond post-disaster reconstruction to in

263、centivize structural improvements before disaster strikes,preventing damages and losses from occurring in the first place.The changes that need to be made for insurers to support BBB differ depending on whether the scope is commercial insurance,critical infrastructure coverage,small and midsize ente

264、rprises(SMEs),or individual households.Exhibit 10 below provides an overview of what insurers can do to address each of these areas.25Exhibit 10:How insurers can play a larger role in BBBPOTENTIAL ACTIONS FOR INSURERS123Make changes to existing insurance policies and reinstatement clauses to support

265、 BBBProvide premium reductions to incentivize policyholders to take risk mitigation measures,serving the dual benefit of reducing risk of loss for the insurance company and making insurance more affordable for the policyholderWork with the public sector to provide funding to support structural impro

266、vements or relocation,potentially in exchange for reduced premiumsExample(s)Insurers can remove the“same location”clause in their policies to allow for potential relocation out of high-risk areas to reduce risk of potential loss While there is currently a reinstatement clause available to support BB

267、B for commercial policyholders in some markets,this clause can be refined to encourage more widespread use across insurance brokers Insurance companies in Germany,the Netherlands,and Barbados have incentivized policyholders in high-risk areas to implement customized risk reduction changes to their h

268、ouses,such as installing water-resistant floors,and installing electrical equipment on a higher floor103 Flood Re reimburses up to 10,000 for policyholders to install property flood resilience measures when repairing their properties after a flood104 State governments of Alabama and Louisiana provid

269、e grants of up to$10,000 to homeowners to make structural improvements to their roofs,in exchange for private insurers providing premium reductions105 The NFIP is proposing a buyout and relocation program for severe repetitive loss properties,which enables homeowners to enroll in a guaranteed buyout

270、 of their home prior to a flood106External stakeholder involvementNoneNonePublic sector support requiredScopeCommercial insurance;critical infrastructure;households;SMEsHouseholds;SMEsHouseholds;SMEsSource:Oliver Wyman analysisEnablers to build back betterAs detailed in Recommendation 3,an increased

271、 focus on forward-looking risk modeling enables insurers to analyze the benefits and longer-term cost savings associated with BBB initiatives.This will facilitate a more standardized,widespread approach to pricing resilience and risk mitigating efforts and ability to tie these efforts to premium red

272、uctions.Insurers BBB efforts cannot occur in a vacuum.Regulators must strengthen building codes and improve risk-based land-use planning to incentivize effective insurance BBB policies.Similarly,tax incentives that reflect the shared interests of government and insurers to implement BBB provisions w

273、ould further bolster insurers efforts.This requires increased coordination with the public sector and industry-level influence on public policies.Insurers will also need to be involved earlier in the development process and coordinate across different stakeholders such as developers and the construc

274、tion industry to ensure BBB is integrated with overall planning and new development,and that pricing signals are appropriately incorporated.See Recommendation 5 for additional detail.26RECOMMENDATION 5Advocate for public policies and regulations that support resilienceCOMMERCIAL BENEFIT OF THIS RECO

275、MMENDATIONAdvocating for improved public policies and regulations is an imperative for insurers to capture the commercial opportunities across the above recommendations.By influencing regulations,insurers can expand existing coverage to new markets,utilize new products,and increase revenues.By advoc

276、ating for public policies that better support pre-disaster risk mitigation and resilience,insurers can reduce future losses,protect existing markets,and open up new markets for insurance coverage.As discussed in the barriers section of this report,public policies and regulations can either help or h

277、inder resilience.At a macro-,meso-,and micro-level,regulations can prevent insurers from utilizing the full breadth of their capabilities to transfer risk more effectively and help communities recover more quicklyfrom disaster.At the same time,the ability for insurers to continue transferring risks

278、and remain active in markets relies on maintaining a manageable level of risk exposure through the prevention or reduction of future losses.Insurers are well suited to use their risk information and expertise to inform and influence policy decisions that support risk reduction.This includes influenc

279、ing improved building code standards,strategic land-use planning,and investments in nature-based solutions or other protective infrastructure.Advocating for more effective risk transfer and shifting public focus towards risk reduction will require increased collaboration with government bodies and r

280、egulators.Influencing land-use planning,building code standards,and other strategic risk-based planning decisionsWithout an integrated focus on land-use planning,building code improvement,and other strategic risk-based decisions,efforts to build new structures or rebuild post-disaster can fall short

281、 and result in development in high-risk areas and of haphazard structures.Over time,this increases loss and damages from disaster and makes recovery more difficult.A comprehensive focus on planning becomes increasingly important,now more than ever,as a significant portion of the global population is

282、 exposed to the increasing risks of climate-related disasters due to urbanization.For example,the number of people expected to be exposed to tropical cyclones and earthquakes in large cities will more than double by 2050.107 Ensuring that communities are developed with risk in mind will reduce impac

283、t from future disasters,increase resilience,and contain the expansion of new risks to allow the insurance industry to play a larger role in recovery.Given risk data is a core part of the insurance business model,insurers are well positioned to influence,advocate for,and support risk-based planning a

284、nd decision-making in both urban and rural areas.For insurers,this means getting involved much earlier and to a greater degree in planning with the public sector.If insurers prioritize risk communication early on,including the sharing of risk assessments,updated hazard mapping,disclosure information

285、,and updated models,then decision makers can make and facilitate better building and land-use decisions.Examples of specific changes that insurers can influence include encouraging the establishment and wider application of more resilient building codes,discouraging development in high-risk areas(e.

286、g.,via charging higher risk-based premiums to these developers),advocating for improved water regulations and engineering standards,and advocating for greater public investment in nature-based solutions and protective infrastructure such asflood defenses.27Practically,there are several ways that ins

287、urers can use their expertise to advocate for change:1.Expand one-on-one relationships with communities where insurers are already providing coverage.An example of this type of partnership exists in South Africa between Santam,South Africas largest insurer,and a municipality along the Vaal river.Aft

288、er dealing with repeated flooding and increasing losses,Santam began sharing data and risk assessments with the municipality to support flood-related disaster planning and increase resilience in the area.In return,the municipality provides information around the location of specific assets such as b

289、oats to improve Santams ability to underwrite the risks and develop relevant products.This relationship benefits the insurer in that it can improve its ability to price risk as well as reduce future disaster-related losses,thus reducing risk and keeping insurance coverage available.108 2.Collaborate

290、 to improve data sharing and risk communication in communities.This type of advocacy is in effect across Austria,Germany,Switzerland,the UK,and Norway,where insurance companies and associations collaborate to create national risk maps and share data to support land-use planning within communities.10

291、9 3.Form associations to collectively advocate for improved standards.Insurers exerting influence via research institutes is not a new concept and has historically been successful across many different lines of coverage.Relevant to property insurance and addressing disaster risk,the Institute of Bus

292、iness and Home Safety(IBHS)in the United States uses scientific research to advocate for improved public standards and more widespread adoption of building codes and resiliency measures.110 This results in a prevention of future losses and a reduction in risk,enabling insurance to remain affordable

293、and keeping insurers active in markets.Removing regulations that restrict insurance capabilities and productsThe insurance industry has a wide range of capabilities and products available in its existing toolkit to support risk transfer and reduce the existing protection gap.However,the appropriate

294、regulatory environment must exist to enable insurers to have a more widespread impact on resilience.Many countries have restrictions that prevent insurers from participating in certain markets to the full extent.Restrictions differ depending on the region,country,and community,but include regulation

295、s around market access,actuarial-based pricing,and acceptable products and distribution channels.While not exhaustive,Exhibit 11 provides examples of regulations that hinder the insurance industrys effectiveness.28Exhibit 11:Examples of current restrictions that hinder insurance effectivenessREGULAT

296、IONDESCRIPTIONReinsurance is beneficial in that it can transfer risk outside of a country and diversify large risks across regions,insuring what would otherwise be uninsurable.Reinsurance enables countries to recover more quickly after disaster and is particularly beneficial in areas that are more s

297、usceptible to the effects of climate change.However,many countries restrict cross-border reinsurance and prevent domestic insurers from purchasing reinsurance froma reinsurer that does not operate within the country.111Restricted access to cross-border reinsuranceInsurance-linked securities(ILS),suc

298、h as catastrophe bonds,provide a way to transfer additional risk directly into capital markets to supplement,or even substitute for,traditional insurance.As this product is often issued by reinsurers,it is subject to similar cross-border restrictions.More broadly,ILS are subject to stringent securit

299、ies regulations.112Insurance-linked securities restrictionsSeveral regulations can exist that restrict the insurance industrys ability to maintain actuarial,risk-based premium pricing.These can be direct restrictions,such as capping insurance prices,or imposing community-based pricing,which leads to

300、 a distorted perception of actual risk exposure.113 Regulations can also indirectly prevent risk-based pricing by impacting the insurers ability to accurately assess and therefore price risk,such as in California with restrictions on using certain catastrophe models to price wildfirecoverage(althoug

301、h new legislation may change this).114Risk-based pricing restrictionsParametric insurance pays out a pre-established amount based on magnitude of event(e.g.,an earthquake with a magnitude of 5.0),instead of reimbursing after a claim is submitted and assessed.This reduces operational time and effort

302、that is associated with the claims loss-adjustment process,and enables funding to reach policyholders more quickly.Microinsurance,which offers smaller payouts in exchange for lower premiums and is a growing product in developing markets,is often a parametric product.115 However,this product is restr

303、icted in certain regions for example due to the inability to demonstrate an insurable interest or prove indemnification against an incurred loss.Product restrictionsSource:Oliver Wyman analysis29Regulators need to protect and act on behalf of policyholder interests.However,there are certain cases,as

304、 exemplified in the above exhibit,where regulations do not fulfill this intended aim.According to a report published by the Insurance Development Forum,the regulatory environment must be responsive“to consumer and industry needs,including effective,efficient,timely and transparent licensing and prod

305、uct approval decisions;reasonable accommodation of innovative distribution models;acceptance of new risk capital structures,such as insurance linked securities;and the use of parametric products where appropriate.”116 In the absence of this type of regulatory environment,insurers cannot fully meet t

306、he needs of different markets and groups to provide more comprehensive coverage whilst maintaining commercially-attractive pricing.Both Morocco and India are examples of countries with supportive,rather than restrictive,regulatory environments.In Morocco,the regulatory authority does not require pre

307、-approval for new insurance products and supports price liberalization.In India,the regulatory authority considers insurance a core component of its mandate and takes a proactive approach to facilitating market growth,raising awareness of insurance,and collaborating with othergovernment agenciesTher

308、e is not a perfect,one-size-fits-all solution for influencing regulations.However,insurers can start by:Educating government stakeholders and regulators on existing risks,how insurance can play a more significant role across different markets,and where the current regulatory barriers are to insuranc

309、e making a more widespread impact Advocating for increased regulatory and government focus and resources on insurance,similar to the example in India.Insurance is not always explicitly called out as part of regulatory and public finance frameworks Sharing quantitative data and risk expertise to supp

310、ort the understanding of risk profiles and exposures,and encourage removal of overly restrictive regulations305.Roadmap for successThe recommendations detailed in this report outline opportunities for insurers to contribute to reducing the financial and physical impact of increasing weather-related

311、disasters,expand global insurance coverage,and ultimately improve economic outcomes.This is a commercial imperative for the industry as climate-related risks continue to grow and threaten global businesses and communities.Insurers should determine how these recommendations can be leveraged to best s

312、uit their priorities and goals,taking into consideration their key geographies,risk exposure,size,and capabilities.While the implementation of the recommendations and definition of success may vary across firms,insurers must all take steps to align their business with adaptation and resilience and a

313、ddress growing climate risks.While individual insurers should establish targets for their organizations,it will be critical for global leaders to provide guidance on metrics that can track the insurance industrys progress and measure success.Defining and sharing metrics will further encourage the in

314、surance industry to focus their efforts on resilience opportunities.Through their expertise,resources,and influence,supranational organizations,such as the Insurance Development Forum(IDF),the International Cooperative and Mutual Insurance Federation(ICMIF),and the International Association of Insur

315、ance Supervisors(IAIS),can and are playing a vital role in providing direction on metrics,socializing ongoing progress,and highlighting potential challenges.Ultimately,though,enabling widespread impact on resilience will require a greater effort than that of a single firm or organization.It is essen

316、tial for the insurance industry and its stakeholders to engage in widespread collaboration and take collective action to increase global climate resilience and adaptation.31SupplementOngoing adaptation and resilience insurance initiativesSupport for climate adaptation and resilience in the insurance

317、 industry is already well underway.The UN High-Level Champions-Adrienne Arsht Rockefeller-Marsh McLennan joint-report published last year at COP27,“Fulfilling a Legacy of Societal Risk Management,”highlighted 17 innovative insurance initiatives that were advancing climate adaptation and/or risk redu

318、ction.Over the last year,many of those initiatives have made successful progress,and many more initiatives have begun.The following case studies showcase ongoing initiatives that are working to tackle the existing resilience gap,serving as valuable examples for other stakeholders to learn from and e

319、xpand upon.These initiatives encompass key themes from the recommendations such as strategic partnerships,collaboration and knowledge sharing,data and analytics,policy advocacy,product innovation,and financing and investments.These themes reflect the diverse strategies and approaches being employed

320、to comprehensively address climate adaptation and resilience.They also illustrate progress being made on the Sharm el-Sheikh Adaptation Agenda call to action for the insurance sector,which had three primary deliverables:1.To spur more industry involvement in community-level projects:Strong progress

321、in insurer engagement is reflected in the nearly 100%increase in the number of projects in thisyears report.2.To advance the development of a common framework to measure the industrys impact on climate adaptation:ICMIFs joint benchmarking program with UNDRR is the most advanced,but other organizatio

322、ns are evolving new concepts and approaches.3.To institutionalize an industry focus on accelerating and scaling climate resilience impact:In a highly promising development,this objective may have gained the most traction over the past year,as regulators,policy regimes and industry organizations dram

323、atically raised the profile of andurgency around climate adaptation topics.We thank all the institutions that provided summaries of their efforts for this report.32Anticipatory action and disaster risk reduction initiativeThe Insurance Development Forum,the Start Network,and MapAction have completed

324、 the first phase of their Anticipatory Action and Disaster Risk Reduction Initiative.Initially launched in 2021,the Initiative has provided detailed training to over 150 community leaders in seven countries on the use and benefits of Geographical Information Systems when developing anticipatory acti

325、ons and other disaster riskreduction strategies.The GIS training helps meet the information needs of local NGOs,supporting them to deliver effective humanitarian assistance after a disaster.For instance,this training has enabled access to insights into where frontline workers are needed most as they

326、 deliver help to communities,and where damaged roads or power failures may pose specific challenges to their work.Participating countries include Bangladesh,the Democratic Republic of the Congo,Madagascar,Nepal,the Philippines,Senegal and Zimbabwe.Key sponsors include Aon,AXA,Axis Capital,Milliman,S

327、wiss Re Foundation,WTW and Zurich Insurance.Phase II will focus on scaling the training and further strengthening long-term climate resilience and anticipatory action capabilities.KEY CONTACT:Kipkorir KoskeiInsurance Development ForumCatalyst Climate Resilience Fund(CCRF)The CCRF is an impact fund a

328、nd accelerator supporting pre-seed tech startups that are building a climate resilient future in Africa.The fund blends capital from concessional and commercial equity investors to invest$200,000 in selected pre-seed portfolio companies.It combines capital and venture building support and will have

329、significant reserves to make follow-on investments at Seed and Series A in selected portfolio companies.The Fund announced in September 2023 an initial close of$8.6 million towards a target$40 million fund size.The fund plans to invest in adaptation across sectors including fishery management,food s

330、ystems,cold chains,and water management.To date,the fund has invested in 10startups from six countries including Egypt,Senegal,and Morocco.The CCRF,which was designed by the Climate Policy Initiative,is accompanied by a grant-funded facility called the Catalyst Ecosystem Hub that promotes shared lea

331、rnings,builds communities,and engages ecosystem actors to create a more vibrant,informed,and effective climate resilience ecosystem in Africa.KEY CONTACT:Maelis CarraroManaging Partner,Climate Policy Initiative33Climate resiliency challenge US-based CSAA Insurance Group,global broker AON,and the inn

332、ovation incubator IDEO launched a$1 million Climate Resiliency Challenge to catalyze creative solutions to challenges in disaster prevention,preparedness,and recovery.In total,418 submissions were received,but only 13 winners were recognized across three categories:Emerging,mid-stage,and advanced so

333、lutions.Examples of winning ideas include the following:A prescribed fire technology called BurnBot that can safely and cheaply eliminate dead vegetation,thereby significantly reducing wildfire exposures A flood monitoring platform called Hohonu that allows communities and their residents to track real-time flooding A bio-inspired manufactured oyster reef called Reef Rocket that can withstand extr