Climate change with a twist

At the start of this month I attended the second assembly for CREW – the Community Resilience to Extreme Weather project. CREW comes under the broad banner of climate change initiatives but as I discovered throughout the course of the day, the project’s angle of approach is somewhat unique: climate change, but through a new lens.

In the (re)insurance industry, climate change has been drawing our attention to the Atlantic basin frequency of late. However, here in the UK, we would be remiss as a sector to ignore what is happening closer to home. There are questions around the frequency and severity of extreme events in the UK that need to be both asked and answered, and the aim of the EPSRC-funded CREW project is to do just that.

Scale and integration were two themes that particularly impressed themselves upon me during the assembly. CREW aims to examine and tackle the impact of climate change at a local level – hence the ‘C’ for community – a departure from the larger scale investigations we’re used to in this area. The targeted output of the project is a set of tools to enable communities to adapt to climate change – the approach is one of vertical integration, covering quantification of the impact all the way through to cost-benefit analysis of options for mitigation. In short, the CREW team is building a package to support climate change-related decision-making.

So what is the ‘so what?’ for (re)insurance? With an arsenal of pricing and risk management tools already at the industry’s disposal, where might the CREW tools fit in?

Well, the climate change scenario modelling is certainly exciting – the ability to project risk forwards beyond the existing baseline and to consider what the industry may be faced with in 10, 20 or 50 years time in the UK. This information would no doubt be valuable for any medium to long-term planning be it growth, investment management or rate adequacy.

The results of the team’s investigations so far have raised red flags for increased weather risk. In addition, one interesting “all-clear” has also been thrown out by the analyses: increased tidal flood risk in South-East London. The full details can be found here but as a summary, the team concluded that we are unlikely to see a meaningful increase in flood depths as a result of sea-level rise.  (Don’t throw the sandbags away just yet, however. The all-clear was specifically for increased tidal flooding only, and there are several other drivers of flood risk in South-East London).

Although the principal users of the toolkit seem likely to be those in the public sector involved in local planning, widespread use of the end product could have significant implications for the (re)insurance sector. If the tools are a success, one possible outcome could be increased “climate-change proofing” of buildings and infrastructure. And this would change the vulnerability of exposures subject to insurable perils in the UK.

But I am getting ahead of myself, and the project, here.

At the July meeting - fifteen months on from the first general assembly - it was clear that the team was several steps closer to delivering the toolkit. But there are many hurdles to overcome before the project is completed. Coordinating research across multi-disciplinary and geographically dispersed teams is no mean feat, and keeping the work and final output relevant to the broad range of end-users (households, SMEs, planners) is an enormous challenge.

I look forward to the next update...