IAA Discussion Paper on Climate Change

The International Actuarial Association (IAA) is pleased to announce the discussion paper “Climate Change, Insurance and Vulnerable Populations”, developed by its Resource and Environment Working Group (REWG).

This paper discusses the key consequences of climate change and its impact on those most likely to be adversely affected. It also addresses methods of financing recovery efforts for vulnerable populations, and the role of insurance in this process.

The paper points out the limitations of both private and public sector insurance approaches to climate-related risk management, which all-too often focus on recovery from the damages rather than minimizing the consequential damages. As a result, the entire risk management process should be addressed. Preparedness is paramount to control the extent of damages, including preventive actions and adaptation efforts, such as the use of resilient buildings and effective land use planning. To those who are most vulnerable, the risks represent major threats to life, health and property across the world, making the methods of mitigating and financing them vitally important.

Gábor Hanák, President of the IAA, said “the objective of this paper is to provide useful information concerning the extent to which private- and public-sector insurance can be used to mitigate the adverse effects of climate change on vulnerable populations. This concerns actuaries who help craft financial solutions to a wide range of problems.”

Sam Gutterman, Vice Chair of the REWG and lead author of this paper, indicated that “there is no unique approach to deal with the adverse effects of climate change that affect those least able to deal with their resulting losses, including human health, life and property. Each country or other relevant grouping should consider its needs, utilizing an appropriate mix of private- and public-sector approaches, recognizing the limitations of each. We hope this discussion paper will provide relevant information to actuaries using appropriate tools and models for the benefit of vulnerable populations regarding adverse effects of climate change.”

The paper is available on the IAA website under PUBLICATIONS/PAPERS.

This activity supports the IAA’s mission to inform and influence global stakeholders, assure the reputation of the profession, and advance the competency of the profession. Further, it contributes towards achieving one of the IAA’s strategic objectives to promote the advancement of scientific knowledge and the skills of the actuarial profession.

To learn more about the work of the IAA on this and related resource and environment topics, contact the Resource and Environment Working Group, care of the Secretariat.