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Climate Change

COP21 – Let’s make the most of the new opportunities

In many respects, 2015 was very much a climate year. It gave us a new global temperature record fuelled by a strong El Niño, significantly exceeding the previous record of 2014. It was almost as if a further compelling argument was being presented for the climate negotiations.

02.03.2016

Throughout the year, suspense built up, accompanied by some extremely ambitious expectations, as we moved towards the climate summit in Paris. It was clear to everyone that a failure like that of 2009 in Copenhagen would signal the end of the UN-led negotiation process – and this had to be avoided at all costs. Back in June in Elmau, the G7 countries had laid solid foundations by reaffirming their commitment to restrict global warming and make support payments to developing countries. However, a new feature was agreement on a five-year project that will enable an additional 400 million people in developing countries to protect themselves against increasing losses from extreme weather events in the form of insurance solutions. This initiative sent out a clear signal: that we take the problems faced by people in developing countries very seriously and are prepared to take responsibility for emissions.

Positive mood inspired goodwill in many countries that would otherwise have tended to block

In my opinion, this gesture had a positive effect on the atmosphere at the negotiations, which have frequently been affected by the conflicting interests of the countries responsible for climate change and those that suffer most from it. Further enabling factors included the superb organisation of the conference by the French hosts, and the excellent management of the negotiations by the French Foreign Minister, Laurent Fabius. A breakthrough was finally reached, not least thanks to the positive mood that prevailed, which inspired goodwill in many countries that would otherwise have tended to block proposals. I believe that the result of the climate summit is the best possible outcome that could be achieved at the present time. What’s more, with the target of holding global warming to “well below two degrees Celsius”, an even stricter limit was set than originally planned. Yet certain risks remain from the Paris Agreement: the individual countries still have to ratify the agreement; there are no sanctions if the voluntary reduction targets are not met; countries can opt out of the agreement. And we also need to be very clear about one thing: even if all the promises are kept, and the reduction targets are tightened after five-year review periods, climate change cannot be stopped.

Insurance solutions now officially recognised as an important part of the adaptation process

Yet Paris represents a breakthrough. It has considerably improved the opportunities to limit climate change within a framework that is still manageable for most countries. The effects, however, which have become already detectable with the current global warming of just under one degree Celsius, will intensify, so more vigorous adaptation efforts are required. From our perspective, a further aspect that must be seen in a very positive light is the fact that Article 8 of the Paris Agreement now officially recognises insurance solutions as an important part of the adaptation process. For example, the already operational pool solutions to cover losses from extreme weather events in poorer countries – such as the African Risk Capacity (ARC), the Caribbean Catastrophe Risk Insurance Facility (CCRIF), and the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) – are seen as useful and extendible approaches. It is now up to us insurers to breathe life into the new opportunities that have emerged. As a globally operating reinsurer, we understand better than anyone the very different regional hazard situations, how they are changing and the vulnerabilities involved. Managing risks – including those posed by climate change – is part of our core business. After Paris, the door is now open for us to contribute our expertise and help to achieve a meaningful increase in people’s resilience to the unavoidable consequences of climate change. Let us make the most of this opportunity!

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