Climate change futures: health, ecological and economic dimensions

• Social and economic factors in developing countries increase vulnerability to climate change and may lack the
capacity to adapt.
IV. There are some risks that will not affect the bottom line of insurers for the foreseeable future
but can have a huge impact on millions of people and the quality of life worldwide.
• Many of the groups most affected by the growing rate of tropical diseases, such as malaria (that is, the poor in
developing countries), are not likely to be insurance clients in the near future.
• Similarly, some of the regions most prone to extreme weather events and environmental degradation are in the
developing world — and currently have little or no access to insurance.
• Such uncertainties can affect the climate of investment and impact investment portfolios in the developed and
developing world.
V. Ultimately, to grow their business in an increasingly globalized economy, insurers will need to proactively
consider climate change risk in all of their global markets.
106 | FINANCIAL IMPLICATIONS
• Risk exclusion strategy will shrink existing markets and reduce insurer ability to pursue high growth in emerging
markets, making it an unattractive strategy.
• Emerging markets for insurance are growing at twice the rate of the mature markets.
• Insurers may not have the option of pulling out of markets due to government regulations.
• There may be opportunities to collaborate with the UN and international aid agencies to provide insurance
in developing countries, using innovative products such as micro-insurance and micro-finance.
• Government can play the role of insurer of last resort.
• Governments can also provide incentives for insurers to enter new markets.
As a result of the current uncertain environment, society is increasingly vulnerable to new risks that are not
presently covered by insurers. The Millennium Development Goals that drive the United Nations programs provide
guideposts with which to foster and measure success, and mixed strategies will be needed to manage and
reduce risks in the course of achieving those goals.
Wind Farm
Image: Photodisc