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Impacts of a Changing Climate on Economic Damages and Insurance

Abstract

Weather and climate extremes cause huge economic damages and harm many lives each year (∼35000/year). There is evidence that some types of weather and climate extremes, like heat waves and flooding, have already increased or intensified over the last few decades, and climate projections reveal a further intensification for many types of weather and climate extremes in many regions though the uncertainties still remain large. While there is evidence for increases in economic losses it is uncertain whether this is due to an increase in the number and intensity of extreme events or can be attributed to socio-economic changes. However, there is agreement that the increasingly complex and internationally distributed supply chains of global companies make them more vulnerable to extreme weather events. It is also thought that global warming will adversely affect the global food supply chain and especially developing countries. Here I survey how weather and climate extremes impact our economies and how we can mitigate their impacts using financial and insurance products.

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Acknowledgments

I would like to thank Dr. S. Hokamp for his helpful comments on an earlier version of this manuscript. This work has been supported by the German Research Foundation through the cluster of excellence CliSAP (EXC177) and SFB/TRR181 at the University of Hamburg.

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Correspondence to Christian L. E. Franzke.

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Franzke, C.L.E. Impacts of a Changing Climate on Economic Damages and Insurance. EconDisCliCha 1, 95–110 (2017). https://doi.org/10.1007/s41885-017-0004-3

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Keywords

  • Weather risks
  • Climate risks
  • Extremes
  • Insurance
  • Reinsurance
  • Catastrophe modeling