Global reinsurance and Bermuda’s role in acting as a shock absorber against climate risks are at the forefront of discussion at COP 28, with industry experts talking about the risks associated with climate change.
In a report from The Royal Gazette, Rachel Delhaise, head of sustainability for Convex Insurance, emphasized the significance of catastrophe risk models used by insurers to estimate the financial impacts of climate-related disasters like hurricanes, wildfires, and flooding. While acknowledging the complexity and imperfections of these models, Delhaise noted their importance in predicting the effects of global warming.
Tim Nielander of African Risk Capacity (ARC) Group also highlighted his work in building cooperation mechanisms between countries and the private sector. In Bermuda’s context, this involves collaboration with reinsurance companies to protect populations against climate change impacts, including drought and tropical cyclones. ARC, with its four disaster-risk programs worldwide, the largest being in Bermuda, covers around 100 countries. These programs are supported by a mix of financing sources, focusing on addressing climate risks for vulnerable communities.
The concepts of adaptation and resilience were also at the forefront, with Hub Culture moderator Stan Stalnaker pointing out the alarming increase in global refugees, expected to rise from 75 million to 120 million in the next 12 months. He referenced initiatives like ARC’s “Pacific Resilience” program launched at COP28, which aims to provide development assistance to combat climate impacts, and an agriculture-focused program in Latin America designed to reduce migration pressures.
Stalnaker also suggested that Bermuda could become a hub for climate-related activities, focusing on nature-based solutions. He mentioned Convex’s involvement in data collection for nature-based solutions, particularly in oceanic studies.
A current ocean study, a collaborative effort involving Convex, the Blue Marine Foundation, and the University of Exeter, is in its second year. Led by Exeter, it involves multiple universities and focuses on the carbon sequestered in the seabed. The data from this study, aimed at being openly accessible via a Harvard database, could inform the development of green protected areas and seagrass habitats.
Stalnaker also introduced the concept of a Bermuda Standard, a new initiative to consolidate global climate data into a central, open, and accessible resource.
Delhaise highlighted Convex’s research on climate risk and the necessity for increased insurance penetration, especially in wildfire and hurricane-affected areas. She noted that only about one-third of the total economic losses of $300 billion due to climate disasters are covered by insurance, with particularly low coverage in the Global South. Convex, along with many Bermuda insurers, is part of an insurance risk forum working to expand coverage in these underinsured regions.
The discussion also touched on the emerging concept of Blended Finance. A global finance fund for risk mitigation, announced in Paris in 2015, received a recent boost with a $30 million contribution from the United Arab Emirates. Such public-private initiatives are seen as vital for driving collaborative efforts in risk mitigation, with Bermuda potentially playing a significant role.
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