Biological Systems Engineering


Date of this Version



Catastrophe & Climate Strategic Research Program Newsletter – August 2020, pp 10-19.


Copyright © 2020 by the Society of Actuaries. Used by permission.


Climatic events have accounted for 91% of $1.05 trillion in insured costs for global catastrophic events from 1980 to 2016. Costs are driven by socio-economic development and increased frequency and severity of climatic disasters driven by climate change. Government policies to reduce systemic risk (e.g., cap-and-trade, carbon tax) have been a predominant approach for mitigation and adaptation. Alternatively, market-based incentives for climate change adaptation and mitigation already operate via the insurance industry to lessen impacts on society. Insurance feedbacks include changes in 1) premiums and insurance policies, 2) non-coverage, and 3) policy making and litigation. Alongside government policies, insurance feedbacks could be used to facilitate climate change adaptation and mitigation to a significant degree. Ultimately, a negotiated distribution of climate-related costs between the public and private insurance is needed.