Brief CVs of the speakers.

Catastrophes and Climate Change: Causes, Costs and Counter-Measures - (Re)insurance Perspectives

Gerhard Berz

Over the last few decades, the international insurance industry has been confronted with a drastic increase in the scope and frequency of major natural disasters. This trend is attributable primarily to the continuing steady growth of the world population and the increasing concentration of people and economic values in urban areas. Another factor is the global migration of populations and industries into areas such as coastal regions that are particularly exposed to natural hazards. The natural hazards themselves, on the other hand, are assuming ever more threatening dimensions as global warming continues to intensify many atmospheric extremes. In addition to its prior problems involving pricing, capacity and loss reserves, the insurance industry must now focus more attention on the assessment of insured liabilities, preventive planning and climate protection strategies.

If the global warming predictions come true, the present problems will be magnified drastically. Changes in many atmospheric processes will significantly increase the frequency and severity of heat waves, droughts, bush fires, tropical and extra tropical cyclones, tornadoes, hailstorms, floods and storm surges in many parts of the world. These events will inevitably have a profound impact for all types of property insurance as well as for health and life insurance. Rates will have to be raised, and in the case of flood plains and certain other areas, it will be necessary to impose considerable restrictions such as significant deductibles and low liability or loss limits in order to provide insurance cover at all. In areas of high insurance density, the loss potential of individual catastrophes will confront, in particular, the international reinsurance industry with serious capacity problems. Recent disasters have highlighted the disproportionately heavy burden shouldered by reinsurers in compensating extreme disaster losses and underscored the need to be better prepared for the risks of the future if the insurance industry is to continue to fulfil its obligations in an increasingly hostile environment.

Climate Variability and Extremes

Rasmus Benestad

Applying climate scenarios for prediction of future premiums

Ola Haug

Over the past few years climate change has fully been put on the agenda of various fields of the society. In particular, since IPCC released their 4th annual report on climate change and its consequences last year, discussions have become more acute. One major aspect of the public debate is whether effort should be put into force on the current indication of climate change or if one should rather wait and see due to the considerable uncertainty that encloses this area.

As part of the financial sector, the insurance industry faces substantial challenges from possible climate change. This applies to life as well as non-life insurance. Non-life insurance companies like Gjensidige Forsikring situated in Norway are concerned about assets held by their customers. With such duties, they share a genuine interest in climate change and its impact on future loss levels. Based on improved insight into future threats, insurance companies may update their risk and premium calculations, and announce dedicated preventive measures to customers, building contractors and regulators.

This paper reports on a study of water damage to private buildings. Based on daily claims data and contemporary historical weather data, claims models for the coherence between losses and relevant weather variables are derived. Combined with climate scenario data, these models provide estimates of future loss levels.

We acknowledge Gjensidige Forsikring for their kind co-operation and for access to their claims database.

Disaster prevention by hazard zoning in Austria

Joerg Heumader

Hazard zoning is an important component of passive countermeasures against floods, debris flows, snow avalanches and other natural hazards in the mountainous regions of Austria.

The report describes the procedure for hazard zoning, the used criteria and experiences with this work. Hazard zoning was started about the year 1970 and the regulations for hazard zoning have been included into the Federal Forest Act of 1975. Hazard zoning proved to be not only an excellent base for land-use and development planning and for private self-protection in case of designing and constructing buildings, but has led also to a deepened understanding of natural hazard phenomena and consequently to a better planning culture for control measures of all sorts.

Models of Science & Policy: From expert demonstration to participatory dialogue

Silvio Funtowicz

Science is the basis of the material culture which has so transformed the world; and it is also a primary source of legitimation for policy arguments. As science-related policy issues have come to be recognised as complex and more inherently difficult of solution, the conception of the role of science has also developed and matured. Today, when science is deployed in the policy context, we are aware of the possibility that facts are uncertain, values in dispute, stakes high and decisions urgent. We can define several conceptual models of the relation between science and decision-making in policy processes.

Modern model: Scientific facts, employed in rigorous demonstrations, would determine correct policy. There are no limits to the progress of man's control over his environment, and no limits to the material and moral progress of mankind.

Precautionary model: It is discovered that the scientific facts are neither fully certain in themselves, nor conclusive for policy. Progress cannot be assumed to be automatic, and control over the environment can fail. Because of this imperfection in the science, there is an extra element in policy decisions, precaution, which legitimises decisions.

Framing model: Scientific information becomes one among many inputs to a policy process. Debate is known to be necessary, as different stakeholders have their own perspective and values shaping their arguments. Hence the framing of the relevant scientific problem to be investigated, even the choice of the scientific discipline to which it belongs, becomes a prior policy decision, part of the debate among stakeholders.

Extended participation model: It becomes ever more difficult to defend a monopoly of accredited expertise for the provision of scientific information and advice. A plurality of co-ordinated legitimate perspectives (with their own value-commitments and framings) is accepted. Through this co-production of knowledge, the extended peer community creates a democracy of expertise.

The three models of imperfections can be seen to form a sequence of increasing severity, admitting incompleteness (precaution), misuse (framing) and abuse (demarcation). The final model, of extended participation, involves a change in the form of governance.

Adaptive river management in Hungary - participatory processes

Jan Sendzimir

Global sources of change offer unprecedented challenges to conventional river management strategies, which no longer appear capable of credibly addressing a trap: the failure of conventional river defense engineering to manage rising trends of disordering extreme events, including frequency and intensity of floods, droughts, and water stagnation in the Tisza River Basin. Extreme events punctuate trends of stagnation or decline in the ecosystems, economies, and societies of this river basin that extend back decades, and perhaps, centuries. These trends may be the long-term results of defensive strategies of the historical river management regime that reflect a paradigm dating back to the Industrial Revolution: "Protect the Landscape from the River." Although it has survived wars and 50 years of Soviet rule, failure to address the trap makes the current river management regime's resilience appear detrimental to the region's future development prospects and prompts demand for transformation to a more adaptive river management regime.

Building techniques under review

Cecilie Flyen Øyen

The vulnerability of the built environment will be influenced by global-scale climate change. Climate challenges along with different preconditions for use of buildings and varying styles of architecture, have been some of the prevailing factors in the evolution of building traditions. Due to a long and rugged coastline and large geographical and topographical differences, the climate conditions in Norway are highly varied even within quite short distances. It is likely to assume that the variations will be even more pronounced due to climate change. At the same time, the number of building defects in the Norwegian building stock is high, moisture being one of the main sources of problems.

Although the Planning and Building Act and according building codes are general, not considering such spatial differences, the superior legal framework might not be the appropriate level to deal with these challenges. SINTEF Building and Infrastructure´s Norwegian Building Information Sheets are under revision in order to attend to these variations. This presentation addresses whether it is possible to enhance the robustness of the built environment towards the global climate change thorugh a paradigme shifting revision of the building techniques.

Conclusions from the Swedish report on climate and vulnerability

Torbjorn Olsson

Climate Change seems to already have started to affect everyday life, and we will see more of that already during the next few decades.

The risks have now been better illustrated by the government Commission on Climate and Vulnerability. It is obvious that we must adjust to the risks of more frequent and more intense torrential rains, floods, storms and landslides. An increasing temperature and increasing precipitation will give new factors to take into account when planning, financing and insuring buildings and infrastructures. At the same time we are making our society more vulnerable to the effects of Climate Change.

Insurers will meet the challenge of new risks and the possibilities of new business areas. We have to fend off the risks and make use of the opportunities. We also have an important role as a constructive partner in making society more robust as well as decreasing emissions.

And we need to get started now.

Defining hazard-thresholds for insurers/State's claim responsibility

Knut Nordskog

Changes in storm occurrence over Northern-Central Europe

Hans von Storch

The assessment of changing storminess is hindered by the inhomogeneity of wind-data, i.e., changes in wind statistics over the years do not necessarily (and, indeed: rarely) reflect changes in regional wind conditions, but are contaminated by various local and non-meteorological factors, such as changing land-use, changing instrumentation and analysis practice. Instead, so-called proxies are employed to assess changing wind and storm statistics. Such proxies must represent storm statistics, and must not be affected by changes in the environment and in the observational practice. Unfortunately, economic damages can not serve for this purpose, but statistics about the frequency of low air pressure readings, strong spatial pressure gradients or deep short term pressure falls are useful proxies. They have been used in several studies for Northern Europe and Eastern Canada. An alternative is to derive storm indicators with regional climate models, which process homogeneously analyzed information about the large-scale circulation. Also this approach has successfully been used in the North Atlantic sector.

In all cases, an intensification of storm activity was detected for the time of about 1970-1990; however, the trend has reversed since in both the proxy and the model studies; before the 1970s there was a long-term decrease in Northern Europe; in Eastern Canada there were equally phases of intensification and weakening, and no systematic change could be detected so far - which is -at least in Europe - consistent with model projections for the rest of this century.

Geographic Thinking for Insurers - managing risk, exposure and capital allocation

Mike Cooper

Flood risk mapping in Europe: examples and lessons learned

Jos van Alphen

Within the context of the European Flood Risk Management Directive, adopted in 2007, an inventory was made of flood mapping practices in Europe. It revealed that many countries disseminate flood maps (mainly flood extent) and flood hazard maps (depth or depth-velocity combinations) via Internet yet. Most countries present flood extent for floods with 1/100 flooding probability. Flood risk maps sometimes combine flood probability with information on the adverse consequences (like potential damage and inhabitants affected). Although some countries have maps on potential flood damage (M€ / ha.), maps presenting flood risk (as defined by probability x consequences) are rare. Switzerland and Italy have a method in which this flood risk is related to land use and building regulations.

Since many European rivers and flood prone areas are part of transboundary water systems, uniform approaches in flood (risk) assessments, map legend and presentation are urgently needed. Promising examples exist for the Rhine, Elbe and Moselle catchments.

How is ClimateWise changing the relationship between insurers and the public?

Andrew Voysey

Challenges of areal-planning, flooding in the UK

Swenja Surminski

Public perceptions of climate change

Elisabeth Meze-Hausken

Communicating Uncertainties for Those Insuring Future Climate Change

Leonard A Smith

Decision support is enhanced when both insights and uncertainties propagate from climate science to application, often through one or more layers of computer modelling, experimental statistics, and/or extreme economics, before reaching applications in policy-making and industry. This exercise would benefit from more aggressive participation from numerate decision makers, helping climate scientists and statisticians not only design future climate research, but also allowing a clear public definition of what information we about the future we expect to be robust, and what (currently) depends on the details of our understanding and our models (which we expect to change significantly as the science advances).

Clear communication uncertainties within the climate sciences, with political and industrial decision makers, and to the general public may prove of great value in facing the challenges posed by anthropogenic climate change.

Experiences from being a climate troubadour

Tor Traasdahl

A risk management perspective. What type and size of coverage?

Tomas Ljungqvist

Global warming - A changing risk landscape

Silvio Tschudi

Looking at insured losses caused by natural catastrophes in the past decades, significant peaks and trends are obvious. This is also true for Europe, where future weather patterns might cause higher and more frequent weather related losses. It is also more than likely that current protection measures will not be sufficient any more.

On the other hand, also the business environment is changing: new regulations, emerging climate related litigation and new markets (as e.g. carbon markets) are calling for action.

As a global player, Swiss Re makes use of its knowledge and financial power to provide solutions to overcome climate related changes and to support mitigation measures. The company follows a climate strategy, where sustainable risk management, innovative product development, raising awareness at industry and governmental and a reduction of its own environmental footprint is clearly addressed and put into focus.

Wildfire insurance

Fiona Shaw