Who should bear the cost of the changing climate?

Who should bear the cost of the changing climate? | Insurance Business

Who should bear the cost of the changing climate?
Is insurance the “canary in the coalmine of climate change?” the Deep South National Science Challenge asked, as it announced a series of new projects that investigate the legal, economic and ethical dimensions of who should bear the cost of the changing climate.

Are insurance companies taking more notice of climate change risk than homeowners, local or central government? And who should pay for the damage caused by climate-related disasters, or for the incremental costs our changing climate is starting to rack up? These questions and others raised by insurance experts, social and economic policy researchers and climate scientists are addressed by the new projects, the organisaton said.

The first of the series, being run by Catherine Iorns of the Law Faculty at Victoria University of Wellington, is investigating some of the legal questions surrounding sea-level rise and insurance. Iorns tries to establish who is liable for taking (or not taking) adaptation measures. The project looks into the “tipping points” at which insurance companies might decide to refuse insurance to coastal property owners, and asks, what happens next?

The second project focuses on investigating insurance retreat. Belinda Storey, an economics PhD student at Victoria University of Wellington, runs the research, which explores how coastal housing markets impacted by climate change might respond to insurance retreat – if insurance becomes unavailable. Storey will identify the locations around New Zealand most likely to lose access to insurance in the coming years, as the likelihood of extreme events increases.

Elisabeth Ellis of the University of Otago is running the third project, which addresses a key question: On a principled level, how should the risks of sea-level rise be distributed among individuals, insurance, local and central government? The project will also look at international literature on the ethics of risk distribution while highlighting New Zealand’s unique history and institutions.

The Deep South Challenge said a separate existing project being run out of Motu looks at the role of the EQC in paying for climate-related events and in fostering recovery post climate-related disasters. The project aims to provide answers on whether insurance pay-outs have supported households and communities to recover economically, and what the EQC’s financial liabilities might be in the future, given climate-change projections about extreme weather.


Related stories:
ICNZ calls for “stronger push” to NZ’s climate change adaptation
Insuring coastal homes amid climate change