Climate Hub Rio, Getulio Vargas Foundation hold debate on insurance and climate changes
The roundtable featured insurance companies, brokers, regulators, and academics discussing challenges in the natural catastrophe insurance market.
Climate Hub Rio, a part of Columbia Global Center Rio specialized in climate issues, held an event to debate insurance and climate changes in partnership with Getulio Vargas Foundation (FGV) Institute for Innovation in Insurance and Reinsurance on Wednesday. The roundtable brought together representatives from insurance companies, brokers, regulatory bodies, and academics to discuss the challenges and needs of the insurance market in the context of natural catastrophes and related events.
Bernard Salanie, the Sami Mnaymneh Professor of Economics at Columbia University, spoke at the event and added some insights from his recent studies. He analyzed the current situation of underinsurance observed in Brazil when it comes to coverage against weather-related events and shared insights from study cases that were previously implemented in other countries, such as the USA, France, and several Caribbean nations.
Professor Salanie, who has been teaching at Columbia since 2005, is currently conducting a research project on Municipal-level Flood Insurance, powered by a grant awarded in May after a partnership between Climate Hub Rio and the Municipality of Rio de Janeiro. Daniel Mancebo, who serves as the General Coordinator at the municipality’s Planning Office (EPL), also contributed to the debate by sharing some details about municipal initiatives for climate-related hazard prevention.
Fellow debaters also included Professor Gesner Oliveira (FGV São Paulo), Pedro Werneck (Brazilian National Insurance Confederation), and Daniele Amaral (Rio de Janeiro’s State Environmental Institute).
According to Salanie, this kind of debate is extremely necessary to address the issue as a whole and tackle the problem more efficiently. That is why it is so important to promote knowledge exchange among every stakeholder involved.
The problems of climate change and its impact on the population are so huge that you cannot have just academia thinking on its side, the insurance on their side, the local governments on one side, and the federal government on another one. You really need to bring everyone to the table. That’s what we tried to do, and we hope to continue to do it in the future.
As natural disasters become more frequent and more severe, it is urgent for all agents involved to engage in improvements and solutions to mitigate the impact of these events, especially floods, droughts, and wildfires, the most common events to happen in Brazil. Although recent years have seen several significant incidents in this field, most of the country’s housing insurance contracts don’t offer coverage against climate events.
Other participants also collaborated by deepening the conversations and creating more understanding of the whole picture. Data brought to the table pointed to the need to develop public policies to stimulate infrastructure improvements that prevent them from happening, as well as raising awareness of the need for this kind of insurance among the greater audiences.
From the insurance market’s perspective, the situation also demands building standards for risk-based pricing that rewards mitigation and the creation and improvement of cost coverage methods through different funding mechanisms.
In his opinion, the event can pave the way to make a broader impact that, in the long term, will potentially lessen the social and economic damage inflicted on vulnerable populations and help attenuate their suffering in case of climate-related catastrophes. In May, South of Brazil faced its heaviest rain storms and floods since data started to be collected. So far, the financial consequences are estimated to be USD 33 billion, which equals to an extent similar to the damage caused by Hurricane Katrina in Southern USA in 2005.
“We had a very productive roundtable which brought together academics and insurance to talk about the climatic crisis in Brazil and how these risks can be mitigated for one thing, and insured so that especially the most vulnerable populations don’t have to suffer too many consequences like what we saw in Rio Grande do Sul recently. And I am very hopeful that this contact will continue, that we will bring this to the awareness of the greater public and bring the decision-makers to the table to, perhaps, start devising a solution”, claimed Salanie.