INSURANCE SECTOR
Who this page is for
This entry point is for insurers, reinsurers and the public authorities that carry natural hazard risk, and for the intermediaries who arrange cover or capital for it. It addresses the question the industry actually faces: whether a change in the landscape can be shown to change the losses it pays, at a resolution and on an evidential basis that an underwriting or a capital decision can use.
The project's position is that the physical and economic case can be made, but that making it requires the risk reduction to be expressed in the units the industry works in — an expected loss, a return period, a portfolio exposure — rather than in ecosystem service terms. The material here is the part of the guide that does that.
Start here
Catastrophe risk modelling structure for insured damages — the structure through which a change in hazard is carried into insured losses, so that an intervention's effect appears as a change in expected loss rather than as a benefit.
IVE survey results — what the industry itself said about its ability to recognise and reward risk reduction, including the barriers it identified as technical, regulatory and structural.
Natural hazard schemes — the comparison of nine European national systems, and the crucial question of whether premiums may be differentiated by risk. Where they may not, no mechanism exists through which a reduction in local risk can be rewarded.
Natural assurance schemes and the NAS canvas — how the risk reduction an ecosystem delivers is recognised and paid for, and which arrangements have worked.
The evidence base
Two things have to be true for an arrangement to be possible. The risk reduction has to be demonstrable at the resolution the decision requires, and the benefit has to be capturable by a party that can commit. The hydrological and hydraulic modelling and the damage cost methodology establish the first; the demonstration cases and the natural capital market integration portrait establish the second.
The co-benefits valuation material is relevant where the case for an intervention rests on more than loss reduction, which is the usual situation: a measure that reduces flood peaks is generally also delivering water quality, amenity and habitat, and those services persist in years when the flood does not occur.
Policy and the public sector's role
Much of the risk in question is ultimately carried by the state, which makes the public sector the counterparty for many of the arrangements the project examined. The policy briefs include the one addressed specifically to engaging the insurance sector, and policy mainstreaming of NBS sets out where the concept already appears in European policy frames and at which points in the policy cycle it could be introduced.
