CLIMATE change-triggered events like super typhoons, massive flooding, or landslides can no longer be considered a “force majeure” or an act of God. Hence, insurance companies must learn to adapt and innovate to enhance insurance products and coverages to help people adapt to, and mitigate climate change.
This was stressed by Dean Antonio G. M. La Vina, Associate Director for Climate Policy and International Relations at the Manila Observatory, during his keynote speech at the 16th Philippine Insurance Summit at the Dusit Thani Hotel in Makati City on Wednesday, April 26.
Organized by the Insurance Institute for Asia and the Pacific Inc. with the Insurance Philippines, the event gathered 320 participants representing different insurance firms. It aims to provide a platform to discuss insights, policies, programs, and initiatives designed to help address climate change.
With the summit’s theme: “Climate change—A deadly Threat to Mankind: Taking the Lead Towards Sustainability and Resilience” through the discussion and cooperation among the private sector, government and regulatory bodies, and insurance organizations, organizers of the event hoped to boost the industry’s resilience against climate change-induced calamities and other related risks.
A climate expert and environmentalist, La Vina talked about the climate crisis: the 1.5 limit and the implications of crossing it for the insurance industry.
“Climate change is not an Act of God. It is not force majeure. It is predictable,” La Vina stressed, as he discussed the latest updates from the 6th Assessment Report of the Intergovernmental Panel for Climate Change (IPCC).
Interviewed by BusinessMirror, La Vina said the insurance industry, hence, must learn to adapt and to innovate. Massive flooding that causes enormous damage to properties, for instance, is not an act of God as they are now the new normal because of climate change. Hence, he said insurance companies should be able to adapt and innovate to help people cope with the challenges posed by climate change-triggered events.
“The innovation here is that they know that it is predictable and it is going to happen; hence, the premiums should be high enough to cover all the damage. You cannot sell a product if you cannot cover it,” he said.
“It is unequivocal that human influence has warmed the atmosphere, ocean, and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere, and biosphere have occurred,” he said.
According to La Vina, global warming of 1.5 degrees Celsius and 2 degrees Celsius will be exceeded during the 21st century without a deep reduction in carbon dioxide (CO2) and other greenhouse gas emissions in the coming decades.
“If global warming transiently exceeds 1.5 degrees Celsius in the coming decades or later, then many human and natural systems will face additional severe risks compared to remaining below 1.5 degrees Celsius tipping points,” he said.
The impacts of human-induced climate change, including more frequent and intense extreme events, have already caused widespread adverse impacts on nature and people, beyond natural climate variability, he added.
According to La Vina, the most vulnerable people and systems are disproportionately affected and poor countries, and poor people, in all countries, impacted.
The impact on public health may mean more pandemics, dengue, and malaria.
With climate change, he said zoonotic diseases or animal diseases are likely to affect humans.
Meanwhile, the rise in weather and climate extremes will lead to irreversible impacts as natural and human systems are pushed beyond the ability to adapt, he added.
On a positive note, there is space and time to address the climate crisis with a whole-of-society approach.
Government, private sector, and other stakeholders, he said, should work together to a just transition from coal and other dirty fuel-based energy to a more environment-friendly option in renewable energy systems.
He said the insurance industry should consider the impacts of climate change as a pervasive risk that requires new responses.
It is imperative, hence for the industry to revise its business models and help support its customers, do stress-test total exposure against projected climate hazards, build resilience and rebalance portfolios, help organizations mitigate climate risk, create innovative products to address climate-related risks, and revise their investment strategies.
