Insurability of Damage Caused by Climate Change: A Commentary

The article by Howard Kunreuther and Erwann Michel-Kerjan provides a powerful overview of changes in extreme weather-related events. Supported by empirical evidence, they show that in recent decades insurers have, more than before, been confronted with catastrophic losses resulting from weather-related events (e.g., hurricanes and flooding). Moreover, they also predict that it is very likely that these types of high-damage events will occur even more in the future. The authors’ contention can hardly be debated; one could easily cite other studies that equally predict that as a result of climate change it is likely that in the (near) future more of these extreme weather-related events will lead to high losses. Much evidence in this respect is gathered in the studies prepared for the Third Assessment Report (TAR) of the Intergovernmental Panel on Climate Change (IPCC), which holds that it is very likely that in almost all land areas humans will experience higher maximum temperatures and that various extreme weather events can be the expected result. The IPCC predicts heavy rainfalls in particular areas, and other extreme weather events like droughts and cyclones in other areas. Even during the week of this Symposium, the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) gathered in Nairobi, where a report was presented that argued that by 2040 it is