Climate insurance and water-related disaster risk management
The number of natural disasters of all types appears to have increased in the last few decades though there is some debate over the evidence for this. What is clear though is that the economic costs associated with extreme weather events have increased. For lesser- developed countries the developmental outcomes have been particularly severe. Recent research indicates that between 1990 and 2015, most economic losses resulted from flooding: around 40% of the total (Daniell, Wenzel, and Schaefer, 2016). Better flood management by governments, for example by China and Japan, seems to have resulted in reduced flood-related losses. Better disaster response and better building and infrastructure have reduced the relative costs in many developed countries. However, for developing countries the necessary regulations and investments are not in place, resulting in them being disproportionately affected when disasters do strike (UNISDR, 2010; Surminski and Oramas-Dorta, 2014).
Many products and initiatives have been developed, but it is not always clear what their effects have been and to what extent they prompt actions to reduce climate risks and build resilience (Gerber and Mirzabaev, 2017). It is necessary to explore the question of how climate- related risk-transfer mechanisms, including insurance, can mobilise water-related disaster risk reduction investments and, by so doing, contribute to development. As the focus is on risk transfer, this paper will cover its role in promoting actions and measures that contribute to the reduction of loss and damage caused by water- related events and, by extension, disaster risk-reduction measures that provide protection from extreme weather events. This paper does not set out to provide solutions or answers to that question. Rather, it seeks to promote a discussion between the insurance and water sectors around this question.