Novel and improved insurance instruments for risk reduction

Swenja Surminski, Paul Hudson, Jeroen Aerts, Wouter Botzen, M.Conceição Colaço, Florence Crick, Jill Eldridge, Anna Lorant, António Macedo, Reinhard Mechler, Carlos Neto, Robin Nicolai, Dionisio Pérez-Blanco and Francisco Rego

No 188, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: Managing risk and adapting to climate change is essential to minimise the losses and damages during and after disasters and extreme weather events. Several risk management approaches exist, one of which is the use of economic instruments (EI). Examples of EIs include taxes, subsidies and insurance to deliver financial protection in the event of a disaster, yet their design and the way in which they operate is essential to their success in mitigating and minimising hazard loss. Insurance is one example of an EI and functions as a tool to share and transfer risks and losses and is useful in aiding adaptation to climate change. Within this context insurance may be delivered using a range of approaches, which together contribute to its feasibility for delivery and operation as well as the potential for incentivising behavioural change. Yet undesirable aspects also exist and can include a lack of comprehensive information and cognitive biases, as well as financial constraints and moral hazard.

Date: 2015-04
New Economics Papers: this item is included in nep-agr and nep-rmg
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Citations: View citations in EconPapers (3)

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