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Adaptation is Key to
Managing Coastal Flood Risk
London, U.K. – September 09, 2008
– Without adaptation,
insurance losses from coastal flooding for
high-risk properties could double by 2030,
according to a new report published today by
Lloyd’s and Risk Management Solutions (RMS).
The research shows that, with an effective
adaptation strategy, future losses could be
reduced to below present-day levels with
losses for high-risk properties reduced by
as much as 70%.
The Coastal Communities and Climate Change
report examines the impact of climate change
on flood risk at a number of coastal
locations in Europe, Asia and the Caribbean,
and the benefits of a variety of adaptation
measures including flood defenses, elevating
property (e.g., on stilts), and changing the
property’s characteristics to make it more
flood resilient.
Sea levels are projected to rise by at least
half a meter during this century,
dramatically increasing the risk of flooding
in coastal areas. The report argues that
poor land-use policy and growing
urbanization are exacerbating the risk of
flooding in these areas.
The report also suggests that the insurance
industry can play a significant part in
encouraging adaptation by policyholders
through incentivization. This can be
achieved through risk-based pricing where
policy premiums are set at a level that more
closely reflects the underlying risk to
which properties are exposed.
Speaking at the launch of the report,
Lloyd’s Chief Executive, Dr Richard Ward,
commented: "With over half the world’s
population expected to live within 100
kilometers of the coast line in 25 years’
time, it is imperative that we address this
risk now by starting to adapt. The world
cannot insure its way out of climate change,
but the insurance industry can play a key
role in the fight against it by encouraging
adaptation, and if this doesn’t happen
insurance will become more expensive and
less available."
Hemant Shah, RMS Chief Executive, said: “As
sea levels rise - along with changes in the
frequency, intensity and geography of
extreme weather events - risks will
increase. Adaptation can reduce future
losses, and to be successful, adaptation
plans must be location-specific and risk
informed. They must also begin today.”
Co-authored by Trevor Maynard, Manager of
Emerging Risks at Lloyd’s and Bob Ward and
Nicola Patmore at RMS, Coastal Communities
and Climate Change is the fourth Lloyd’s 360
risk project report on climate change. The
Lloyd’s 360 risk project aims to generate
discussion and debate about today’s key risk
issues and how best to manage them.
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