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- Adaptation in financial and insurance services in the
short term is likely to be to changing frequencies and
intensities of extreme weather events.
- Increasing risk could lead to a greater volume of traditional
business and development of new financial risk management
products, but increased variability of loss events would
heighten actuarial uncertainty.
- Financial services firms have adaptability to external
shocks, but there is little evidence that climate change
is being incorporated into investment decisions.
- The adaptive capacity of the financial sector is influenced
by regulatory involvement, the ability of firms to withdraw
from at-risk markets, and fiscal policy regarding catastrophe
reserves.
- Adaptation will involve changes in the roles of private
and public insurance. Changes in the timing, intensity,
frequency, and/or spatial distribution of climate-related
losses will generate increased demand on already overburdened
government insurance and disaster assistance programs.
- Developing countries seeking to adapt in a timely manner
face particular difficulties, including limited availability
of capital, poor access to technology, and absence of government
programs.
- Insurers' adaptations include raising prices, non-renewal
of policies, cessation of new policies, limiting maximum
claims, and raising deductibles -- actions that can seriously
affect investment in developing countries.
- Developed countries generally have greater adaptive
capacity, including technology and economic means to bear
costs. |
