13 July 2015
Insurance access and supportive regulation essential for climate resilience, says new report
Report launched at UN Financing for Development conference highlights role insurance can play in protecting human rights
A major new report by the University of Cambridge Institute for Sustainability Leadership (CISL) highlights the essential role of insurance to support resilience and sustainable development in the face of growing climate and natural hazards risks.
Entitled 'Insurance regulation for sustainable development: Protecting human rights against climate risks and natural hazards' the report illustrates how scientific advances have brought foreseeable natural disasters within human rights and wider legal duties of states and non-state actors, and how risk-based insurance systems, enabled by supportive regulation across public, private and mutual sectors are essential to deliver on these existing duties.
Launched at this week's UN Financing for Development Conference in Addis Ababa to finance and development ministers, international institutions and private sector leaders, the report delivers key findings and recommendations to policymakers, regulators and the industry, including:
- Duties to protect human rights against natural hazards have been highlighted in the last year by the UN General Assembly, the UN Sendai Framework and OECD guidelines that also reinforce the responsibilities of business, private and financial sectors.
- Natural hazard resilience, at an individual or collective level, cannot be achieved without access to insurance. As risks grow, under-insurance is an increasing problem across developing, emerging and even many OECD countries.
- Effective insurance regulation facilitates access to insurance and is essential to increase communities' resilience against climate and natural hazards while advancing economic growth, sustainable development and human dignity.
Integrating inputs from industry practitioners, regulators, policy makers and human rights experts with case studies from Asia and Africa (including the African Risk Capacity), the report highlights that risk-based insurance systems, enabled by supportive regulation are fundamental in protecting communities and fulfilling legal obligations though the triad of risk evaluation and management; risk sharing and transfer, and risk sensitive investment.
In the wake of recent G7 commitments to increase climate risk insurance coverage by 400 million by 2020, the report makes five essential recommendations including:
- Policy makers should further recognise that effective insurance systems deliver outcomes that are essential to societal resilience, sustainable development and the protection of human rights.
- Insurance regulation should become a recognised mechanism for enabling human rights, and human rights should be a guiding principle for insurance regulation.
- Inclusive insurance regulation should be prioritised as an essential policy instrument to protect populations and assets from climate risks and natural hazards via public, private and mutual mechanisms.
Lead author and CISL Fellow, Dr Ana Gonzalez Pelaez said:
"Insurance should receive higher emphasis to ensure delivery on various policy commitments across the Post 2015 agenda. Our research shows that the protection of human rights and preservation of community capital from climate risk via insurance regulation are aligned and mutually reinforcing. This has profound implications for policy makers seeking effective and practical solutions to these urgent and complex challenges."
Co-author Dr Sebastian von Dahlen, Chairman, G-AWG, International Association of Insurance Supervisors, Basel added:
'Effective insurance systems play a critical role in supporting the resilience of communities exposed to natural disasters.”
Dr Jake Reynolds, CISL Director, Sustainable Economy said:
“The financial system has unique potential to drive sustainable development if properly incentivised and regulated. Building resilience to climate and natural hazard risks is just one example of this; there are many more across banking, investment and insurance.”
This ground-breaking report delivers a powerful incentive by illustrating how post-2015 commitments and emerging legal duties can be supported via practical, insurance related mechanisms that offer the potential to protect millions of lives, livelihoods and homes in the coming decades.
ENDS
For media enquires please contact Liz Sharmer on 07963 122988 or info@cisl.cam.ac.uk.
Notes to editors
Access the report here: http://www.cisl.cam.ac.uk/publications
About the University of Cambridge Institute for Sustainability Leadership (CISL)
For 800 years, the University of Cambridge has fostered leadership, ideas and innovations that have benefited and transformed societies. The University now has a critical role to play to help the world respond to a singular challenge: how to provide for as many as nine billion people by 2050 within a finite envelope of land, water and natural resources, whilst adapting to a warmer, less predictable climate.
Within the University, the Cambridge Institute for Sustainability Leadership (CISL) empowers business and policy leaders to make the necessary adjustments to their organisations, industries and economic systems in light of this challenge. By bringing together multidisciplinary researchers with influential business and policy practitioners across the globe, it fosters an exchange of ideas across traditional boundaries to generate new, solutions-oriented thinking. His Royal Highness the Prince of Wales is the Patron of CISL and plays an active role in its work.
Read more: www.cisl.cam.ac.uk
The report complements the work of ClimateWise, the global insurance industry’s leadership group to drive action on climate change risk, which is convened by CISL.
This report contributes to CISL’s Rewiring the Economy plan. Rewiring the Economy presents ten interconnected tasks for government, finance and business leaders over the next ten years to lay the foundations for a sustainable economy and deliver against the forthcoming Sustainable Development Goals.
See more: www.cisl.cam.ac.uk/rewire
About CISL Fellows
CISL’s Fellowship includes leading academics and expert practitioners who undertake substantive and extensive work with in support of CISL’s mission and goals. Fellows are appointed by CISL’s Management Board on the basis of their contribution to CISL’s research, education, or development of CISL’s initiatives.
CISL Fellows bring a wealth of experience from their work with business leaders and policymakers. They engage in Cambridge research projects that bring insight to business action, and make expert contributions to the design and delivery of CISL’s executive education programmes.
