D. Michael Adams
Insurance Hurdles to Protecting Coasts & Ports
How can we prepare the world’s #ports #coasts and #sids for sea level rise and storm surges - beyond anything we’ve seen before? Ports are the gateways for development and the hubs controlling maritime industries. So they are especially important to protect.
Today #climateinsurance offers a variety of #catrisktools as described by IDF. The #insuranceindustry helps with risk modelling, pricing and innovation in risk transfer solutions. As investors, the industry’s asset-liability approach is constrained by fiduciary duties and regulations.
Whilst basic #esg and #climaterisk factors are now standard, many hurdles remain to creating more risk transfer solutions*:
• Limited access to risk information and related risk pricing difficulties
• Public policy, regulatory and legislative issues
• Lack of awareness about insurance
• Weakness of domestic insurance markets
• Limited take-up of disaster insurance
• Regulatory barriers to access global reinsurance
• Scalability and sustainability of insurance programmes
We also have hurdles to scaling up green investments:
• Limited capacity of the markets to accommodate large-scale portfolio allocations to green
• Need for well-defined asset classifications, standards and methodologies for assessing green investments
• Fragmentation in climate policies and regulations that impact investors’ confidence
• Regulatory risk capital charges that could restrain long-term green investments
• Lack of appropriate price signals, such as failure to price carbon
• Need for green technology investment opportunities and structures that better satisfy the insurance industry’s risk appetite
• Data and transparency for informed investing
Regulators, capital markets and data providers need to address these hurdles urgently. Without a more diverse offering and deep investor support, ports, coasts and islands are on the front lines of #climatechange and will remain dangerously vulnerable.