Climate Disasters to Hike Insurance Premiums, UN-backed Funds Earmark Over US$200mn for Adaptation, and More

Today in Climate Proof:

Finance:

• Climate Disasters to Raise Insurance Premiums 50% by 2030 — Howden

• GEF Approves Millions for Adaptation

Policy:

• Biden Administration Unveils Plans to Climate-Proof the Federal Government

Tech:

• Marsh Debuts Adaptation Centre

Research:

• Another round-up of papers and journal articles on all things climate adaptation

Climate Disasters to Raise Insurance Premiums 50% by 2030 — Howden

Insurance payments to protect against climate-related disasters are projected to increase by half over the next six years, according to estimates by Howden Insurance and Boston Consulting Group (BCG).

This translates to US$200 - 250bn in global premium payments. The drivers of the expected price spike are higher annual losses from climate shocks, a ramp-up of exposures, and a growing trend whereby insurance risks are shifted from the public sector into private markets. The advent of climate-related disclosures, which are helping market participants to price climate risks, are also likely to play a role.

The Howden/BCG report says that in order to better address escalating climate risks, businesses should stop thinking about insurance as something to be purchased and reviewed year-on-year, and instead engage insurers on risk management early on in the development of new assets and businesses that advance the climate transition. It also urges firms to examine their physical risk exposure “so that they can make fully informed decisions around investments and the implementation of resiliency measures.”

In addition, the report calls on insurers to equip businesses with better climate risk information through risk consulting and analytics services.

Howden founded Howden Climate Risk & Resilience in 2021. The unit offers insurance and risk management services to businesses and activities that support the climate transition. It also provides products and solutions to enhance climate resilience.

Howden Climate Risk & Resilience is led by Rowan Douglas, who previously headed up WTW’s Climate Resilience Hub, and is currently chair of the Resilient Planet Data Hub.

GEF Approves Millions for Adaptation

UN-backed funds approved over US$200mn for climate adaptation spending at a Washington, D.C. meeting last week.

The Global Environment Facility (GEF) Council said the money would be used to boost flood resilience in Laos and Cambodia, create climate-resilient transport infrastructure in Sao Tome and Principe, bolster food security in Sierra Leone, and support youth- and women-led green businesses in Chad, among other things.

The funds would be disbursed from the Least Developed Countries Fund (LDCF), one of the six funds overseen by the GEF. The facility is a partnership of 186 countries set up in 1992 to parcel out donor funds for various environmental and climate priorities. Between 2022 and 2026, the GEF is projected to have over US$5bn in finance to distribute. The latest disbursements are in line with agreements made by GEF member governments at their previous meeting in February.

The funds earmarked for adaptation make up part of a total US$736mn allocated by the GEF following the recent council meeting. Other funds are being channeled to support sustainable cities, efforts to address chemicals and waste, and conserve wildlife. The meeting also authorized the first work program of the Global Biodiversity Framework Fund (GBFF), which was established to support to Kumming-Montreal Global Biodiversity Framework and its 2030 nature goals. Around US$38mn will be distributed to biodiversity-enhancing projects in Brazil and Mexico.

Other Stuff

Pakistan: World Bank approves US$535mn for crisis-resilient social protection and climate-smart growth in the livestock and aquaculture sectors (World Bank Group)

Bangladesh receives US$900mn World Bank financing to increase economic and urban resilience for sustainable growth (World Bank Group)

Bolivia promotes climate resilient Roads with World Bank support (World Bank Group)

Canada and Asian Development Bank launch new fund to support private sector climate action and nature-based solutions (Asian Development Bank)

IMF Executive Board approves over $650mn finance for Madagascar, in part to address climate vulnerabilities (IMF)

British Columbia launches Disaster Resilience and Innovation Funding (DRIF) program to support First Nation and local government projects that protect against natural and climate-driven hazards (gov.bc.ca)

Caribbean Development Bank chief says ‘no time to waste’ on climate action (Reuters)

Institute of International Finance responds to International Association of Insurance Supervisors’ consultation on climate risk consultation package 3, concerning changes to Insurance Core Principles guidance to reflect climate risk (IIF)

Global Center on Adaptation announces participation in Morocco’s Inclusive and Sustainable Development Support Programme for Forest Areas (Global Center on Adaptation)

Financing Africa: where is the money? (Mo Ibrahim Foundation)

Climate Resilience Investment Pipeline (World Food Programme)

Biden Administration Unveils Plans to Climate-Proof the Federal Government

Twenty federal agencies published updated adaptation plans as part of a widespread effort by President Biden to climate-proof the US government. 

NASA, the Environmental Protection Agency (EPA), Department of Labor, and Department of the Interior are among those with refreshed plans. The plans include measures to strengthen federal buildings against climate shocks, prepare employees for taxing work conditions, and enhance the resilience of federal lands.

The plans set out how each agency will embed adaptation and resilience into their respective missions through to 2027. Each plan is supposed to also link climate adaptation actions to other Biden administration climate initiatives, which include scaling up nature-based solutions and ensuring that enough climate finance flows to disadvantaged communities.

The publication of the adaptation plans follow a Biden administration paper detailing climate-related risks to the US government, which found that federal agencies “face a range of financial risks associated with climate-related disasters to their respective portfolios.” It also underscored increasing climate-related pressures on the federal budget that would be felt by these agencies, including from crop insurance, coastal flooding, health insurance, and wildfires.

Other Stuff

Readout of the first United States-European Union dialogue on climate and security (US Department of State)

80% of people globally want stronger climate action by governments, according to UN Development Programme survey (UNDP)

Marsh Debuts Adaptation Centre

Insurance and financial services giant Marsh McLennan is bundling its data, modeling, and expertise on climate adaptation into a new initiative for clients in Asia.

The Centre for Climate Adaptation and Resilience Excellence (CCARE, an acronym fail if I ever saw one) aspires to help businesses in communication and technology, energy and power, and agriculture adapt to climate risks and opportunities. It boasts capabilities that support companies assess their climate risks, integrate climate-resilience actions into their long-term strategies, prepare for future climate shocks, and obtain financing for climate-proofing initiatives. 

Marsh is also promising to engage with the public sector on adaptation issues, saying that CCARE “supports the alignment of policies and frameworks that incentivise and empower climate adaptation initiatives.” In Asia, countries including Singapore, Thailand, and Indonesia have developed adaptation plans and spearheaded resilience strategies to cope with escalating climate impacts.

Data from Swiss Re suggests Asia’s economy could be 26.5% smaller than it is now in a 3.2°C world relative to one without warming.

Other Stuff

Wind, a French VC, closes €90m of targeted €130m for fund focusing on adaptation tech (sifted)

New warning system can alert Canadians about coastal flood risks earlier (The Weather Network)

Climate physical risk analytics tech firm Jupiter launches Jupiter AI to accelerate access to economic climate insights (Jupiter)

ZestyAI, climate risk analytics platform for the insurance industry, joins property and casualty solutions provider Duck Creek Technologies’ ecosystem (ZestyAI)

ICRISAT unveils new technologies to improve crop production in dryland areas (Kenya News Agency)

RESEARCH

The use of decision making under deep uncertainty in the IPCC (Frontiers in Climate)

What the tragic floods in Southern Brazil tell us about health-centered climate-resilient development in Latin American cities (The Lancet Regional Health - Americas)

Swiss Re unpacks cascading effects of natural disasters and other key emerging risks in 2024 SONAR Report (Swiss Re)

The Netherlands: financial sector assessment program – technical note on supervision and disclosure of climate-related risks (International Monetary Fund)

Amazon forest biogeography predicts resilience and vulnerability to drought (Nature)

Exploring climate change impacts on rural livelihoods and adaptation strategies: Reflections from marginalized communities in India (Environmental Development)

Extreme heat killing more than 100 people in Mexico hotter and 35 times more likely due to climate change (World Weather Attribution)

Thanks for reading!

Louie Woodall
Editor