Insurance innovations and incentives for adaptation using weather reanalysis tools for contract pricing

Burton, D. and Best, P. and Fairweather, H. and Mushtaq, S. (2012) Insurance innovations and incentives for adaptation using weather reanalysis tools for contract pricing. In: Climate Adaptation in Action 2012: Sharing Knowledge to Adapt (NCCARF 2012), 26-28 Jun 2012, Melbourne, Australia.

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Reanalysis techniques show that extreme weather events such as heat-waves and significant, severe hail have increased over most of Australia in the last fifty years of the 1871-2008 period. Indemnity insurance of such weather hazards is becoming increasingly expensive and difficult to price as they become a more systemic feature of the Australian climate. Innovations such as index-based insurance based on site moisture and climate indicators such as the Southern Oscillation may offer a better treatment of such multiple perils by allowing a more widespread offsetting of risks for vulnerable communities. Such benefits may be increased if some aggregation of risks is encouraged by insuring co-operatives, longer-term contracts are used to provide some stability to the market and adaptation incentives are offered to the participating groups as a way to lower the premium costs. We illustrate these arguments by considering the insurance of weather risks for a typical farming community in the Queensland to New South Wales near-coastal strip. There is considerable potential for useful interactions with other sectors such as the energy and water industries.

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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Speech)
Refereed: Yes
Item Status: Live Archive
Additional Information: © National Climate Change Adaptation Research Facility 2012 NCCARF Publication 14/12. Abstract of oral presentation only.
Faculty / Department / School: Historic - Faculty of Sciences - No Department
Date Deposited: 14 Mar 2013 21:10
Last Modified: 28 Feb 2018 06:14
Uncontrolled Keywords: climate change; weather; insurance; Australia; flood; drought; hail
Fields of Research : 04 Earth Sciences > 0401 Atmospheric Sciences > 040104 Climate Change Processes
15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
14 Economics > 1402 Applied Economics > 140207 Financial Economics
Socio-Economic Objective: D Environment > 96 Environment > 9603 Climate and Climate Change > 960301 Climate Change Adaptation Measures

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