The insurability of the impacts of climate change

Insurance mechanisms have been proposed as tools that could aid the process of adaptation to climate change in developing countries. A number of useful proposals have been made in recent times, and striking innovations have been trialled in the field of indexed insurance, but they have generally accepted the usual criterion of „insurability‟ - that risks have to be quantifiable, occur randomly, and be many in number, so that variations in claims are smoothed out. From the client‟s side, the premiums have to be affordable and the contract has to perform reliably. This paper explores some of the „uninsurable‟ aspects of the impacts of climate change to discover whether insurance could also be a tool for managing slow-onset chronic problems such as sea level rise and desertification, and also damage to ecosystems. This could substantially expand the scope of insurance as a mechanism in the field of adaptation, and open the door to a more comprehensive system of assistance for developing countries. The paper also considers how best to position any innovative mechanism in regards to its justification. The notion of „responsibility‟ is firmly rejected through a consideration of the processes that give rise to climate-related damage, and the political dynamics of the negotiating forum, in favour of „solidarity‟: a neutral rationale that already applies in many risk-sharing systems.