The rising threats posed by extreme weather and climate events are challenging the way insurers approach at-risk areas. From wildfires in California, USA, to flooding in Emilia-Romagna, Italy, coordinated efforts are needed to create innovative insurance solutions.

This is where science will play an increasingly crucial role in finding innovative solutions. At the forefront of these efforts, scientists are working with all stakeholders – from insurance companies to policymakers and local communities – to build resilience in a changing world. “The future of insurance will depend on solutions that do more than just compensate for damage – they must actively help reduce exposure to risk,” says CMCC researcher Guido Rianna.

How climate change is reshaping the insurance landscape

The consequences of rising temperatures are becoming ever more obvious as more frequent and intense extreme events, such as floods, storm surges, and wildfires continue to threaten people and their livelihoods. At the same time, insurance policies that offer coverage against climate-related hazards are not keeping up with the pace of change, both in terms of affordability and availability.

On Climate Foresight we look at this evolving dynamic and how CMCC researchers, such as Guido Rianna and Stefano Ceolotto, are leading the way in finding innovative insurance solutions. From parametric insurance policies that provide immediate financial support to community-based insurance models and efforts to bring nature back into the picture, there are actionable solutions to the unfolding crisis.

“The key idea is that insurance should not only cover damages but also incentivize risk reduction through better land management. By maintaining the land, both the insured and the insurer benefit from reduced risks and costs,” says Rianna.

Read the full article here.

The last resort

Sometimes, adaptation options run out. As climate change continues to increase flood risk in Europe, planned relocation is a measure of last resort that is being taken into consideration to reduce people’s exposure to disasters when protecting socio-ecological systems becomes unfeasible either technically, socially, or economically.

The Piedmont region in Northern Italy – in collaboration with the EU-funded ITHACA project (planned relocation as adapTation in a cHAnging ClimAte) led by CMCC researcher Elisa Calliari – are looking into planned relocation efforts. They held a workshop on December 12, 2024, to share Piedmont’s experience with this approach so that it can be useful for other localities experiencing similar challenges. The workshop brought together around 200 participants, both in-person and on-line, from public authorities in Piedmont and beyond.

The workshop revealed how, since 2003, the Piedmont Region has been devising and implementing an anticipatory relocation policy for residential buildings at hydro-geological risk. Under the scheme, residential property owners can participate in a voluntary buyout scheme and move to safer areas within the same province with public funding support.

The relocation policy is justified in terms of cost-effectiveness and saving public money as moving people away from high-risk areas involves lower investments than protecting a small number of residents at risk or continuously providing ex-post compensations to those affected.

The EU policy landscape on adaptation

The climate change adaptation landscape is complex and requires a comprehensive understanding of the state of affairs and what is needed to address them. The ETC-CA Report 2/2024 is the most updated and comprehensive document regarding the European legal framework on climate change adaptation.

“We talk a lot about national adaptation policies – strategies, plans and increasingly climate laws in Europe, without always understanding how they work in a national setting or how they differ or compare across national contexts,” says CMCC researcher Katie Johnson, who contributed to the conceptualization, research and writing of the Report. “With this work we were able to dive deeper into policy documents, explore their contents, and better understand the adaptation process through interviews with national experts on adaptation.”

The result is a journey into how plans and strategies work on both a national stage and how they differ or compare across borders. Produced by the European Topic Centre on Climate change adaptation and LULUCF (ETC CA), the report provides a deeper understanding of the current adaptation policy landscape in the European Environment Agency member and cooperating countries across the four dimensions of the adaptation cycle and will help inform the upcoming amendment of the EU climate law, preparation of the first European Climate Adaptation Plan, and the second European Climate Risk Assessment.

As climate risks grow, so does the need for effective, science-based solutions. From new insurance models to relocation strategies and adaptation policies, addressing these challenges requires collaboration across sectors. CMCC research provides the knowledge and tools needed to support informed decisions. The path ahead is complex, but with the right strategies, we can build a more resilient and prepared society.

CMCC projects contributing to innovative insurance solutions:

• European Extreme Events Climate Index (E³CI): under this project CMCC coordinates efforts to create a European climate risk index that helps develop actuarial sciences and natural sciences that deal with risk assessment in the insurance sector.
• NATURANCE: examines the technical, financial, operational feasibility and performance of solutions that are built upon and combine disaster risk financing & investments with nature-based solutions.
• PIISA: works on the development of a range of insurance solutions/products and best practices that could be included in existing products or replicated as new products to support adaptation in EU regions and communities, including through the collection and sharing of comprehensive and harmonized data on climate-related risks and losses.
• The HuT: the development of a suite of diverse tools that integrate technological, human and nature-based solutions for innovative disaster risk reduction. This will involve integrating and leveraging best practices and successful multi-disciplinary experiences that have been recently developed within various territorial contexts by leading European research groups, institutions, and stakeholders, to deal with extreme climate events

This article was originally published by CMCC here