AN ASSESSMENT OF THE IMPACT OF CLIMATE CHANGE ON THE INSURANCE MARKET: GLOBAL AND LOCAL ANALYSES

26th June 2015, 16:15 - 18:15

Quick Links:   Programme Overview  •  Parallel Sessions 6  •  Climate change: insurance

Session: Climate change: insurance
Chaired By: Mordechai Shechter, University of Haifa
When & Where: 26th June 2015, 16:15 - 18:15, Room Room 10
Presented By: Mordechai Shechter, University of Haifa
Co-Author(s): Ayelet Davidovitch, University of Haifa, Ofira Ayalon, University of Haifa and Ruslana Palatnik, University of Haifa; Academic College of Emek Yezreel
Discussant(s): Bin Hu, Central University of Finance and Economics

The Climate change phenomenon is considered as one of the main risks that could affect global socio-economic system and the insurance industry in particular. This study examined the climate change impacts on the insurance sector and the global economy in the medium-long term by 2050, focusing on four (4) major natural factors: Extreme Temperature, Drought, Flood, and Wildfire. The research is based on a unique insurance market model and integrates both the CGE model and econometric estimation. As a test-case, the detailed results are based on data-sets of the Israeli economy. The main finding indicates that there is a significant impact of extreme temperature and flood factors, while drought and wildfire factors do not have significant impact. Moreover, there is a significant impact of the heat-waves sub-factor. Since Israel is more vulnerable to extreme weather than floods events and in particular to heat-waves, we expanded the analysis temperature increase events. Furthermore, a change of 2-4C in the maximum average temperature in Israel by 2050 is expected to cause an increase of 9-15% in insurance sector expenditures. In terms of the impact on GDP, it is expected to decrease by 0.1%, which means 250 Million US dollars per year.

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