- The report analyses how climate change and nature loss are undermining insurability widening the global insurance protection gap and sets out policy solutions to strengthen resilience for households, businesses and governments.
- Modern economies depend upon insurance as a cornerstone for economic development and financial stability. By enabling the transfer or risk, insurance protects households and businesses from financial shocks, supports faster and fairer recovery after disasters, and underpins long-term investment.
- The climate and nature crises are rapidly undermining the foundations of the insurance system. Extreme weather events are becoming more frequent and severe. Degraded ecosystems are less able to mitigate their impacts.
- As losses caused by extreme weather events and chronic hazards like sea-level rise mount, the gap between total economic losses and the amount of those losses covered by insurance – what we term the climate insurance protection gap – is growing. This is leaving more people and businesses exposed to increasing risks.
- The combined effects of extreme weather and protection gaps on income, asset prices, credit and mortgage markets, and public finances threaten economic and financial stability, prosperity and social cohesion.
- Therefore, the WWF, with an advisory group comprised of representatives from the insurance industry, academics and an insurance regulator, has drawn up the following recommendations for public actors to tackle the insurance protection gap strategically. Such an approach includes strategies to reduce disaster risk and increase resilience, addressing the root causes of increasing risks and using the capabilities of the insurance sector.
- Conduct holistic and forward-looking risk and resilience assessments.
- Reduce GHG emissions and nature destruction domestically and through international cooperation to contain mutually reinforcing climate and nature risks.
- Make nature and nature-based solutions a centerpiece in adaptation and resilience planning and in response and recovery efforts.
- Enhance policy incentives and insurance regulation to support risk transfer solutions and financial resilience.