Learning Adaptation: Climate-Related Risk Management in the Insurance Industry

Part of the Advances in Global Change Research book series (AGLO, volume 42)


Insurance is a prominent, well-established mechanism for risk transfer in developed countries. While North American governments have stalled on both mitigation of and adaptation to climate change, the insurance industry (globally and in North America) is already viewing recent catastrophic events as being partially climate change related and exploring new adaptation initiatives. In general, the intent of these initiatives is to assure the prosperity of the insurance sector, not to prevent damage to life and property. Reliance by insurers on predictive risk modeling continues to be limited, as new initiatives are prompted by extreme events rather than modeled projections of damage. As another example of reactive behavior, insurers rely on legal judgments to determine the extent of their liabilities. This pattern of learning and response has two implications. First, opportunities for anticipatory adaptation prompted by insurer initiatives are very limited, which guarantees continued large losses from extreme events into the future. Second, proactive risk mitigation will have to be pursued and implemented on behalf of public welfare by the relevant branches of government and cannot be left to market forces.


Anticipatory adaptation Insurance Climate change Institutional learning Climate-related risk management Climate change damages Risk management Property risk Catastrophic events Risk modeling 



The authors are grateful for the helpful comments of two anonymous reviewers. Thank you to Jean-Nöel Guye, Daniel Hoffman, Howard Kunreuther, Lester B Lave, Erwan Michel-Kerjan for many helpful suggestions. And thank you to Iris Grossmann for her insightful review.

This research was made possible through support from the Climate Decision Making Center (CDMC) Department of Engineering and Public Policy at Carnegie Mellon University. This Center has been created through a cooperative agreement between the National Science Foundation (SES-0345798) and Carnegie Mellon University.


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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Institute of Resources, Environment and SustainabilityUniversity of British ColumbiaVancouverCanada
  2. 2.Institute of Resources, Environment and Sustainability and Liu Institute for Global IssuesUniversity of British ColumbiaVancouverCanada

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