The substantive engagement between the insurance and environmental sectors is relatively new. Separately both Ecosystem-based Adaptation (EbA) and Climate Risk Finance & Insurance (CRFI) have been used to aid adaptation, reduce and transfer risk. Many studies refer separately to the effectiveness of EbA or insurance measures for adaptation and risk reduction. Despite these overlapping objectives of EbA and CRFI approaches, these concepts have so far predominantly been considered separately in the past. This review examines where these concepts align and identifies how this alignment could be further catalysed to reduce impacts to lives, livelihoods, property and ecosystems.
The report assesses the successes, challenges, gaps and opportunities around the nascent but growing efforts in EbA- CRFI as an approach to climate adaptation. Key findings are presented, along with recommendations.
- Better analyses of risk reduction benefits for more habitats;
- Advancement of existing nature-based data within risk industry modeling tools;
- Including these Nature-based Solutions in the assessment tools that underwriters surveyors, and others use to assess premiums and incentives;
- Greater inclusion of EbA and nature-based measures in cost effective analyses;
- Better financial and donor support for the development of CRFI & EbA demonstration projects including for concept development;
- Improvements in habitat restoration approaches to help meet risk reduction and environmental goals;
- More efforts on developing green and impact bonds that explicitly include risk reduction measures and benefits.
The report indicates that few fully integrated Climate Risk Finance & Insurance (CRFI) & EbA products (e. g. reef insurance) currently exist, and that such solutions face some challenges. That said, there are many common interests and significant opportunities which could help improve integration of CFRI with EbA and more broadly Nature-based Solutions (NbS), which will lead to innovations beneficial to both sectors and, most importantly, to improved resilience outcomes for vulnerable people and for nature.