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Wednesday, September 10, 2008

Lloyd's Report on Coastal Communities


Lloyd's has released a new report as part of its 360 Risk series that provides an insurer's perspective on the risks that climate change poses to coastal communities. The report examines a number of case studies spanning developed and developing nation perspectives assuming a range of defences and climate scenarios. The report's Executive Summary provides six key lessons:


  1. If no action is taken, losses from coastal flooding for high risk properties could double by 2030 Therefore, adaptation is vital. While mitigation through reducing greenhouse gas emissions is the only effective way to turn the tide of climate change, adaptation is vital given the potential future rate of climate change.

  2. With an effective adaptation strategy, future losses can be reduced to below present day levels In almost every case study in our report, adaptation would reduce losses resulting from climate change in the 2030s to less than the present day. The losses for high-risk properties could be reduced by 70% through using flood defences together with flood resilient and flood resistant measures.

  3. The insurance industry can encourage adaptation by policyholders through incentivisation Governments and insurers can play a key role by providing further financial incentives for adaptation; for instance, they can set policy premiums at a level that more closely reflects the risk to which individual properties are exposed. If adaptation measures are not implemented, insurance will become more expensive and less available.

  4. Locations and circumstances There is no single solution for managing coastal flood risk for all future situations or eventualities. Society will need to be flexible enough to take account of the uncertainties surrounding the consequences of climate change.

  5. Currently, poor land use policy and increasing urbanisation are key drivers of rising flood risk Climate change adaptation measures must therefore take account of other factors that affect flood risk in coastal areas, such as planning policies.

  6. The world cannot insure its way out of climate change Insurance is an effective way of managing individual risk that cannot be dealt with by adaptation. Adaptation and effective risk-informed development planning are the only means of reducing total risk.

Collectively, these conclusions highlight the potential benefits of adaptation as well as the fact that human agency, not just climate change, is a major component of rising social vulnerability in a changing climate.


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