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Climate Change Day Musings: Lessons from The Marshalls on Insurance and Technology

On this day of Climate Change Awareness,  I am proud of the leadership role that the insurance industry is playing in raising awareness of climate change impact, and supporting change adaption and remediation.

Map-Marshall_Islands If you are not aware of our industry’s activities combating the effects of climate change, take a moment to check them out and see what you can do to promote and support them.  Before we do, will you join me on a trip to the Marshall Islands, where climate change is not a debate: it is an existential threat?

About The Marshalls …

Marshall islanders are proud, self reliant, strong people.  And they are great mariners.  They have to be … there are only a few commercial air strips in the island chain, and water landing on the Pacific ocean is not recommended.

The Marshall Islands are located 3,700 km southwest of Hawaii and span 300 km, lying between 5 and 7 degrees north of the equator. It is comprised of 29 atolls.  Important note:  an atoll is the rim of an ancient volcano, which creates a circle of dry land just above the ocean’s waters.  On Majuro, some parts of the land lie 30 cm above sea level.

The Marshall Islands have been strategic points for many nations, including Germany, Japan, and the US.  The first hydrogen bomb was tested on Bikini Atoll in the Marshalls.  The result was displacement of a a population for decades, devastating the way of life for the inhabitants.

In the first part of my career, I worked in the Pacific, doing disaster training and response.  I spent time in the Marshalls doing both.  I was on the islands once after a small typhoon.  I had never seen such complete damage.  The wind was bad, the water worse.  That was in the late 1970s.

The ocean levels have risen since.  In March of this year, there were ‘King Tides’, which caused substantial damage and evacuations.  Based on The Intergovernmental Panel on Climate estimates, the impact of these natural phenomenon could inundate two thirds of island chain.  This displacement would outpace the H-Bomb displacement by unknown orders of magnitude.

Insurance will be challenged …

All of this helps me understand that regardless of the causes of climate change, it will have consequnces for most commercial activities, insurance being a canary in the coal mine, so to say.  In June 2013, Macleans published predictions by Blair Feltmate, chair of the Climate Change Adaptation Project at the University of Waterloo, arguing that “Millions of Canadians living in many parts of the country could find their homes declared uninsurable, as the insurance industry grapples with skyrocketing water damage claims.”

The past year has played out enough examples to support this thesis, and we will be facing hard decisions on coverage for overland flooding. This is a daunting task, however work already initiated gives hope that we will address the challenges in an intelligent fashion.

Where did we start …

Canadian insurers have taken a leadership role in identifying exposures, quantifying impacts, and developing accommodation strategies.  One concrete example of industry cooperation is the Institute for Catastrophic Loss Reduction (ICLR).  Founded by the Canadian insurance industry in 1998, the ICLR is an independent, not for profit research institute, which works in conjunct with the University of Western Ontario.

ICLR’s broad theme is: “science to action: Canada’s insurers building disaster resilient communities”.  it researches and provides advice to homeowners, builders/developers, and municipalities to reduce the impact of natural disasters.

ICLR does not weigh into debates on the politics of climate change, but does provide required adaptation strategies. In 2011, it published research on trends, entitled “Climate change information for adaptation,” the purpose of which was to demystify climate change to “permit initiation of pro-active adaptation measures.”

 Where does technology fit …

The ICLR and other awareness and adaptation initiatives are only as good as the data behind the analyses.  The industry has supported private an public initiatives to understand climate and its impact.

Moreover, new technologies to allow devices to communicate their status in real time will allow more just-in-time solutions to crisis situations.  This blog has provided some examples (see, The Internet of Things&Impact on Insurance), and we expect much more to come.

Will this help the Marshall Islanders?

The threat of storms in the Pacific is ever present, so research will not immediately help people living 30 cm above sea level.  However, the work of ICLR on targeted mitigation schemes, combined with progressive thinking on building specifications will have spin off effects for all those listening and caring.

This is what make me proud of our industry’s approach.

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