Insurance in a climate of change

Statistical physics and dynamical systems perspectives on geophysical extreme events

Statistical physics and dynamical systems theory are key tools to study high-impact geophysical events such as temperature extremes, cyclones, thunderstorms, geomagnetic storms, and many others. Despite the intrinsic differences between these events, they all originate as temporary deviations from the typical trajectories of a geophysical system, resulting in well-organized, coherent structures at characteristic spatial and temporal scales. While statistical extreme value analysis techniques are capable of providing return times and probabilities of occurrence of certain geophysical events, they are not apt to account for their underlying physics. Their focus is to compute the probability of occurrence of events that are large or small with respect to some specific observable (e.g., temperature, precipitation, solar wind), rather than to relate rare or extreme phenomena to the underlying anomalous geophysical regimes. This paper outlines this knowledge gap, presenting some related challenges, new formalisms and briefly commenting on how stochastic approaches tailored to the study of extreme geophysical events can help to advance their understanding.

A systematic literature review on sustainability issues along the value chain in insurance companies and pension funds

Sustainability is now a priority issue that governments, businesses and society in general must address in the short term. In their role as major global institutional investors and risk managers, insurance companies and pension funds are strategic players in building socio-economic and sustainable development. To gain a comprehensive understanding of the current state of action and research on environmental, social and governance (ESG) factors in the insurance and pension sectors, we conduct a systematic literature review. We rely on the PRISMA protocol and analyze 1 731 academic publications available in the Web of Science database up to the year 2022 and refer to 23 studies outside of scientific research retrieved from the websites of key international and European organizations. To study the corpus of literature, we introduce a classification framework along the insurance value chain including external stakeholders. The main findings reveal that risk, underwriting and investment management are the most researched areas among the nine categories considered in our framework, while claims management and sales tend to be neglected. Regarding ESG factors, climate change, as part of the environmental factor, has received the most attention in the literature. After reviewing the literature, we summarize the main sustainability issues and potential related actions. Given the current nature of the sustainability challenges for the insurance sector, this literature review is relevant to academics and practitioners alike.

Impacts of renewable energy on climate vulnerability: A global perspective for energy transition in a climate adaptation framework

The transition to renewable energy can disproportionately impact the effectiveness of climate change adaptation, due to regional heterogeneity. Many countries attempt to promote renewable energy to reduce the impact of climate change, but the impacts of national energy policy in the climate vulnerability framework remain little understood. Here, we exploit variations in renewable energy uses to test the effectiveness of climate adaptation policy across the dimensions of climate impact and vulnerability. Using the Fuzzy Analytic Hierarchy Process and panel data regression, we analyze the spatiotemporal correlation between renewable energy transition and climate vulnerability across the world. We find that while renewable energy increases proportionally with climate exposure and sensitivity, many countries exhibit discrepancies between the variation in renewable energy transition and climate vulnerability. The promotion of renewable energy funnels into nations with a higher level of adaptive capacity while bypassing more vulnerable countries. The results signify that existing renewable energy policies can exacerbate climate inequality and undermine the benefits of the transition to renewable energy by neglecting the spatial heterogeneity in climate vulnerability. Our findings provide empirical evidence for the ways in which renewable energy policy can generate spatial inequalities in climate adaptation.

Applicability of a nationwide flood forecasting system for Typhoon Hagibis 2019

Floods can be devastating in densely populated regions along rivers, so attaining a longer forecast lead time with high accuracy is essential for protecting people and property. Although many techniques are used to forecast floods, sufficient validation of the use of a forecast system for operational alert purposes is lacking. In this study, we validated the flooding locations and times of dike breaking that had occurred during Typhoon Hagibis, which caused severe flooding in Japan in 2019. To achieve the goal of the study, we combined a hydrodynamic model with statistical analysis under forcing by a 39-h prediction of the Japan Meteorological Agency's Meso-scale model Grid Point Value (MSM-GPV) and obtained dike-break times for all flooded locations for validation. The results showed that this method was accurate in predicting floods at 130 locations, approximately 91.6% of the total of 142 flooded locations, with a lead time of approximately 32.75 h. In terms of precision, these successfully predicted locations accounted for 24.0% of the total of 542 locations under a flood warning, and on average, the predicted flood time was approximately 8.53 h earlier than a given dike-break time. More warnings were issued for major rivers with severe flooding, indicating that the system is sensitive to extreme flood events and can issue warnings for rivers subject to high risk of flooding.

Verification of extreme event attribution: Using out-of-sample observations to assess changes in probabilities of unprecedented events

Independent verification of anthropogenic influence on specific extreme climate events remains elusive. This study presents a framework for such verification. This framework reveals that previously published results based on a 1961-2005 attribution period frequently underestimate the influence of global warming on the probability of unprecedented extremes during the 2006-2017 period. This underestimation is particularly pronounced for hot and wet events, with greater uncertainty for dry events. The underestimation is reflected in discrepancies between probabilities predicted during the attribution period and frequencies observed during the out-of-sample verification period. These discrepancies are most explained by increases in climate forcing between the attribution and verification periods, suggesting that 21st-century global warming has substantially increased the probability of unprecedented hot and wet events. Hence, the use of temporally lagged periods for attribution-and, more broadly, for extreme event probability quantification-can cause underestimation of historical impacts, and current and future risks.

Influence of Microtopography and Alluvial Lowland Characteristics on Location and Development of Residential Areas in the Kuji River Basin of Japan

Adopting a comprehensive, basin-wide method for preventing flood disasters would be effective to deflect the climate-change-induced intensified water-related disasters. This study considers the land use and settlement patterns based on microtopography and flood risks. The influence of the microtopography and alluvial lowland characteristics on the location and development of residential areas in the Kuji River basin, Japan, is a fundamental aspect of historical knowledge. Investigating the relation between the microtopography and the location of antiquities shows that most of the relics dating to or before the third century were situated in the terraces near the lowlands. The development of lowlands near the mainstream of the Kuji River began around the third century. Furthermore, the relation between the microtopography and development of residential areas is investigated using building density as the development indicator. The results confirm the increase in building density in the alluvial surface, proving a history of flood damage and delayed development compared to other regions. This investigation reveals land development in areas, including the former river bed on the mouth of the Kuji River and the flood plain on the margins of the Hitachiota urban distinct, with no confirmed inhabitation before modern times because of elevated flooding risk.

Mid-Century Daily Discharge Scenarios Based on Climate and Land Use Change in Ouémé River Basin at Bétérou Outlet

This study evaluates the impacts of land use and climate changes on daily discharge in Ouémé river basin at Bétérou outlet. Observed rainfall and temperature over 2002–2008 and land use data of 2003 and 2007 were used. Corrected rainfall and temperature data, under RCP4.5 and RCP8.5 scenarios from regional climate model REMO were considered. Two land use scenarios from RIVERTWIN project were used. The first one, Land Use A (LUA), is characterized by stronger economic development, controlled urbanization, implementation of large-scale irrigation schemes, and 3.2% population growth per year. The other one, Land Use B (LUB), is characterized by a weak national economy, uncontrolled settlement, and farmland development as well as 3.5% population growth per year. Four climate and land use combined scenarios (LUA + RCP4.5, LUA + RCP8.5; LUB + RCP4.5, and LUB + RCP8.5) were used for forcing LISFLOOD hydrological model to estimate future discharges at 2050. As a result, during calibration and validation, the LISFLOOD model showed high ability to reproduce historical flows of Ouémé River at Bétérou outlet with Nash–Sutcliffe efficiencies greater than 90%. Future discharges simulations show general increase for all land use and climate combined scenarios for all time horizons until 2050. The increase is more exacerbated under the combined scenarios using LUB than the ones using LUA. Increase of river discharge varies between 7.1% and 52% compared to the mean of the reference period 2002–2004. These findings highlight growing challenges for water resources managers and planners. Moreover, they emphasize the need to address potential climate and land use changes’ impact on water resources. Then, developing water management plans, strategies to reduce flooding risks must be considered.

Multidimensional risk in a nonstationary climate: Joint probability of increasingly severe warm and dry conditions

We present a framework for quantifying the spatial and temporal co-occurrence of climate stresses in a nonstationary climate. We find that, globally, anthropogenic climate forcing has doubled the joint probability of years that are both warm and dry in the same location (relative to the 1961-1990 baseline). In addition, the joint probability that key crop and pasture regions simultaneously experience severely warm conditions in conjunction with dry years has also increased, including high statistical confidence that human influence has increased the probability of previously unprecedented co-occurring combinations. Further, we find that ambitious emissions mitigation, such as that in the United Nations Paris Agreement, substantially curbs increases in the probability that extremely hot years co-occur with low precipitation simultaneously in multiple regions. Our methodology can be applied to other climate variables, providing critical insight for a number of sectors that are accustomed to deploying resources based on historical probabilities.

Quantifying the influence of global warming on unprecedented extreme climate events

Efforts to understand the influence of historical global warming on individual extreme climate events have increased over the past decade. However, despite substantial progress, events that are unprecedented in the local observational record remain a persistent challenge. Leveraging observations and a large climate model ensemble, we quantify uncertainty in the influence of global warming on the severity and probability of the historically hottest month, hottest day, driest year, and wettest 5-d period for different areas of the globe. We find that historical warming has increased the severity and probability of the hottest month and hottest day of the year at >80% of the available observational area. Our framework also suggests that the historical climate forcing has increased the probability of the driest year and wettest 5-d period at 57% and 41% of the observed area, respectively, although we note important caveats. For the most protracted hot and dry events, the strongest and most widespread contributions of anthropogenic climate forcing occur in the tropics, including increases in probability of at least a factor of 4 for the hottest month and at least a factor of 2 for the driest year. We also demonstrate the ability of our framework to systematically evaluate the role of dynamic and thermodynamic factors such as atmospheric circulation patterns and atmospheric water vapor, and find extremely high statistical confidence that anthropogenic forcing increased the probability of record-low Arctic sea ice extent.

Climate change mitigation: the potential of agriculture as a renewable energy source in Nigeria

Energy is pivotal to the economic development of every nation. However, its production and utilization leads to undesirable carbon emissions that aggravate global warming which results in climate change. The agriculture sector is a significant user of energy. However, it has the potential to be a major contributor to Nigeria's energy supply mix in meeting its energy deficit. More so, in the light of current and impending adverse effects of climate change, there is a need to contain GHG's emissions. This paper focuses on bioenergy utilization as a climate change mitigation strategy and one that can, through effective waste management, enhance sustainable economic development in Nigeria. The paper employed a critical discourse analysis to examine the potential of the agricultural sector to provide biofuels from energy crops and other biomass sources. We conclude that Nigeria can reduce its GHG emissions and greatly contribute to global climate change mitigation while also alleviating its energy supply deficit if the agricultural and municipal wastes readily available in its towns and cities are converted to bioenergy. Such engagements will not only promote a clean and healthy environment but also create jobs for economic empowerment and a better standard of living for the people.

Global-scale river flood vulnerability in the last 50 years

The impacts of flooding are expected to rise due to population increases, economic growth and climate change. Hence, understanding the physical and spatiotemporal characteristics of risk drivers (hazard, exposure and vulnerability) is required to develop effective flood mitigation measures. Here, the long-term trend in flood vulnerability was analysed globally, calculated from the ratio of the reported flood loss or damage to the modelled flood exposure using a global river and inundation model. A previous study showed decreasing global flood vulnerability over a shorter period using different disaster data. The long-term analysis demonstrated for the first time that flood vulnerability to economic losses in upper-middle, lower-middle and low-income countries shows an inverted U-shape, as a result of the balance between economic growth and various historical socioeconomic efforts to reduce damage, leading to non-significant upward or downward trends. We also show that the flood-exposed population is affected by historical changes in population distribution, with changes in flood vulnerability of up to 48.9%. Both increasing and decreasing trends in flood vulnerability were observed in different countries, implying that population growth scenarios considering spatial distribution changes could affect flood risk projections.

Insurance mechanisms for tropical cyclones and droughts in Pacific Small Island Developing States

One group of locations significantly affected by climate-related losses and damage is the Small Island Developing States (SIDS). One mechanism aiming to reduce such adverse impacts is insurance, with a wide variety of products and models available. Insurance for climate-related hazards affecting Pacific SIDS has not been investigated in detail. This article contributes to filling this gap by exploring how insurance mechanisms might be implemented in the Pacific SIDS for tropical cyclones and droughts. The study examines opportunities and constraints or limitations of some existing insurance mechanisms and programmes as applied to the Pacific SIDS. Eight insurance mechanisms are compared and discussed regarding the premium cost compared to the gross domestic product per capita, the amount of payout compared to the damage cost, the reserve and reinsurance, and the disaster risk reduction incentives. As such, this article offers a decision-making tool on insurance development for the Pacific SIDS. Ultimately, implementing disaster insurance for the Pacific SIDS depends on political will and external technical and financial assistance.

The emerging threats of climate change on tropical coastal ecosystem services, public health, local economies and livelihood sustainability of small islands: Cumulative impacts and synergies

Climate change has significantly impacted tropical ecosystems critical for sustaining local economies and community livelihoods at global scales. Coastal ecosystems have largely declined, threatening the principal source of protein, building materials, tourism-based revenue, and the first line of defense against storm swells and sea level rise (SLR) for small tropical islands. Climate change has also impacted public health (i.e., altered distribution and increased prevalence of allergies, water-borne, and vector-borne diseases). Rapid human population growth has exacerbated pressure over coupled social-ecological systems, with concomitant non-sustainable impacts on natural resources, water availability, food security and sovereignty, public health, and quality of life, which should increase vulnerability and erode adaptation and mitigation capacity. This paper examines cumulative and synergistic impacts of climate change in the challenging context of highly vulnerable small tropical islands. Multiple adaptive strategies of coupled social-ecological ecosystems are discussed. Multi-level, multi-sectorial responses are necessary for adaptation to be successful.

Declining vulnerability to river floods and the global benefits of adaptation

The global impacts of river floods are substantial and rising. Effective adaptation to the increasing risks requires an in-depth understanding of the physical and socioeconomic drivers of risk. Whereas the modeling of flood hazard and exposure has improved greatly, compelling evidence on spatiotemporal patterns in vulnerability of societies around the world is still lacking. Due to this knowledge gap, the effects of vulnerability on global flood risk are not fully understood, and future projections of fatalities and losses available today are based on simplistic assumptions or do not include vulnerability. We show for the first time (to our knowledge) that trends and fluctuations in vulnerability to river floods around the world can be estimated by dynamic high-resolution modeling of flood hazard and exposure. We find that rising per-capita income coincided with a global decline in vulnerability between 1980 and 2010, which is reflected in decreasing mortality and losses as a share of the people and gross domestic product exposed to inundation. The results also demonstrate that vulnerability levels in low- and high-income countries have been converging, due to a relatively strong trend of vulnerability reduction in developing countries. Finally, we present projections of flood losses and fatalities under 100 individual scenario and model combinations, and three possible global vulnerability scenarios. The projections emphasize that materialized flood risk largely results from human behavior and that future risk increases can be largely contained using effective disaster risk reduction strategies.

Climate variability and vulnerability to climate change: a review

The focus of the great majority of climate change impact studies is on changes in mean climate. In terms of climate model output, these changes are more robust than changes in climate variability. By concentrating on changes in climate means, the full impacts of climate change on biological and human systems are probably being seriously underestimated. Here, we briefly review the possible impacts of changes in climate variability and the frequency of extreme events on biological and food systems, with a focus on the developing world. We present new analysis that tentatively links increases in climate variability with increasing food insecurity in the future. We consider the ways in which people deal with climate variability and extremes and how they may adapt in the future. Key knowledge and data gaps are highlighted. These include the timing and interactions of different climatic stresses on plant growth and development, particularly at higher temperatures, and the impacts on crops, livestock and farming systems of changes in climate variability and extreme events on pest-weed-disease complexes. We highlight the need to reframe research questions in such a way that they can provide decision makers throughout the food system with actionable answers, and the need for investment in climate and environmental monitoring. Improved understanding of the full range of impacts of climate change on biological and food systems is a critical step in being able to address effectively the effects of climate variability and extreme events on human vulnerability and food security, particularly in agriculturally based developing countries facing the challenge of having to feed rapidly growing populations in the coming decades.

How risk management can prevent future wildfire disasters in the wildland-urban interface

Recent fire seasons in the western United States are some of the most damaging and costly on record. Wildfires in the wildland-urban interface on the Colorado Front Range, resulting in thousands of homes burned and civilian fatalities, although devastating, are not without historical reference. These fires are consistent with the characteristics of large, damaging, interface fires that threaten communities across much of the western United States. Wildfires are inevitable, but the destruction of homes, ecosystems, and lives is not. We propose the principles of risk analysis to provide land management agencies, first responders, and affected communities who face the inevitability of wildfires the ability to reduce the potential for loss. Overcoming perceptions of wildland-urban interface fire disasters as a wildfire control problem rather than a home ignition problem, determined by home ignition conditions, will reduce home loss.

A Bayesian hierarchical model with spatial variable selection: the effect of weather on insurance claims

Climate change will affect the insurance industry. We develop a Bayesian hierarchical statistical approach to explain and predict insurance losses due to weather events at a local geographic scale. The number of weather-related insurance claims is modelled by combining generalized linear models with spatially smoothed variable selection. Using Gibbs sampling and reversible jump Markov chain Monte Carlo methods, this model is fitted on daily weather and insurance data from each of the 319 municipalities which constitute southern and central Norway for the period 1997-2006. Precise out-of-sample predictions validate the model. Our results show interesting regional patterns in the effect of different weather covariates. In addition to being useful for insurance pricing, our model can be used for short-term predictions based on weather forecasts and for long-term predictions based on downscaled climate models.

Adaptation to Climate Change in the Private and the Third Sector: Case Study of Governance of the Helsinki Metropolitan Region

Cities and metropolitan regions are increasingly becoming key locations within which adaptation to climate change is taking place. New modes of governance arrangements are also emerging in cities, and these enable new actors to engage in decision making. In this paper I discuss governance of adaptation in Helsinki. On the basis of empirical data from the private and the third sector, I show how the governance of adaptation is organised within the metropolitan region and, more specifically, what policy instruments are used and what objectives these measures have. The findings suggest that whilst challenges of vertical governance of adaptation remain, there are also challenges in terms of horizontal governance of adaptation.

Projecting insect voltinism under high and low greenhouse gas emission conditions

We develop individual-based Monte Carlo methods to explore how climate change can alter insect voltinism under varying greenhouse gas emissions scenarios by using input distributions of diapause termination or spring emergence, development rate, and diapause initiation, linked to daily temperature and photoperiod. We show concurrence of these projections with a field dataset, and then explore changes in grape berry moth, Paralobesia viteana (Clemens), voltinism that may occur with climate projections developed from the average of three climate models using two different future emissions scenarios from the International Panel of Climate Change (IPCC). Based on historical climate data from 1960 to 2008, and projected downscaled climate data until 2099 under both high (A1fi) and low (B1) greenhouse gas emission scenarios, we used concepts of P. viteana biology to estimate distributions of individuals entering successive generations per year. Under the low emissions scenario, we observed an earlier emergence from diapause and a shift in mean voltinism from 2.8 to 3.1 generations per year, with a fraction of the population achieving a fourth generation. Under the high emissions scenario, up to 3.6 mean generations per year were projected by the end of this century, with a very small fraction of the population achieving a fifth generation. Changes in voltinism in this and other species in response to climate change likely will cause significant economic and ecological impacts, and the methods presented here can be readily adapted to other species for which the input distributions are reasonably approximated.

Preventing cold-related morbidity and mortality in a changing climate

Winter weather patterns are anticipated to become more variable with increasing average global temperatures. Research shows that excess morbidity and mortality occurs during cold weather periods. We critically reviewed evidence relating temperature variability, health outcomes, and adaptation strategies to cold weather. Health outcomes included cardiovascular-, respiratory-, cerebrovascular-, and all-cause morbidity and mortality. Individual and contextual risk factors were assessed to highlight associations between individual- and neighborhood-level characteristics that contribute to a person's vulnerability to variability in cold weather events. Epidemiologic studies indicate that the populations most vulnerable to variations in cold winter weather are the elderly, rural and, generally, populations living in moderate winter climates. Fortunately, cold-related morbidity and mortality are preventable and strategies exist for protecting populations from these adverse health outcomes. We present a range of adaptation strategies that can be implemented at the individual, building, and neighborhood level to protect vulnerable populations from cold-related morbidity and mortality. The existing research justifies the need for increased outreach to individuals and communities for education on protective adaptations in cold weather. We propose that future climate change adaptation research couple building energy and thermal comfort models with epidemiological data to evaluate and quantify the impacts of adaptation strategies.

Insurance against climate change and flooding in the Netherlands: present, future, and comparison with other countries

Climate change is projected to cause severe economic losses, which has the potential to affect the insurance sector and public compensation schemes considerably. This article discusses the role insurance can play in adapting to climate change impacts. The particular focus is on the Dutch insurance sector, in view of the Netherlands being extremely vulnerable to climate change impacts. The usefulness of private insurance as an adaptation instrument to increased flood risks is examined, which is currently unavailable in the Netherlands. It is questioned whether the currently dominant role of the Dutch government in providing damage relief is justified from an economic efficiency perspective. Characteristics of flood insurance arrangements in the Netherlands, the United Kingdom, Germany, and France are compared in order to identify possible future directions for arrangements in the Netherlands. It is argued that social welfare improves when insurance companies take responsibility for part of the risks associated with climate change.

Effect of long-term changes in air pollution and climate on the decay and blackening of European stone buildings

This paper reviews the long-term effects of past, present and future air pollution and climate on the decay of stones from historic buildings. It summarizes the historical effects as well as causes and consequences of damage. The most significant change in terms of pollution has been a shift from high levels of sulphate deposition from coal burning to a blackening process dominated by diesel soot and nitrogen deposition from vehicular sources in cities. Blackening of light-coloured fabric eventually reaches a point where it becomes publicly unacceptable. Public opinion can assist the development of aesthetic thresholds and derive limit values for elemental carbon in urban air. Public perception is also affected by the pattern of blackening. This century new climate regimes will cause dramatic changes in blackening patterns by wind-driven rain. Climate changes, most particularly changes in temperature, humidity stress and time of wetness, can also affect the weathering of stone in terms of responses to frost and soluble salts. Future pollution and climate are relevant considerations in the management of historic buildings.

Refocusing disaster aid

With new modeling techniques for estimating and pricing the risks of natural disasters, the donor community is now in a position to help the poor cope with the economic repercussions of disasters by assisting before they happen. Such assistance is possible with the advent of novel insurance instruments for transferring catastrophe risks to the global financial markets. Donor-supported risk-transfer programs not only would leverage limited disaster-aid budgets but also would free recipient countries from depending on the vagaries of postdisaster assistance. Both donors and recipients stand to gain, especially because the instruments can be closely coupled with preventive measures.