A changing climate threatens the nations bordering the Caribbean and the insurance and reinsurance companies that operate there a new study finds.
The Caribbean Catastrophe Risk Insurance Facility (CCRIF), who received analytical and modeling support from Zurich-based Swiss Re, published the report, Economics of Climate Adaptation in the Caribbean.
The report examines eight countries—Anguilla, Antigua and Barbuda, Barbados, Bermuda, the Cayman Islands, Dominica, Jamaica and St. Lucia—and how climate change could significantly increase the risk of hurricanes and storms in the Caribbean and threaten future development.
Among the findings is that under a worse case scenario, damage from hurricanes and extreme weather could cost Caribbean nations up to 9% of annual GDP by 2030.
“In our high climate change scenario, sea levels may rise by up to 15mm/year (excluding local geological effects such as uplift/subsidence), and wind speeds may increase by around 5% as a consequence of the expected rise in sea surface temperature in the hurricane genesis region,” the report states. “It is important to note that even small local changes may have large effects due to the non-linear correlations between climate and hazards.”
David Bresch, Swiss Re’s Head Sustainability, says the implications of the report are profound for the insurance industry. “As a global reinsurer, we are already exposed to the effects of climate change,” he says. “Projected climate patterns are likely to heighten the risks. This is why climate adaptation is a core part of our business.”
Indeed, the report counsels that countries in the region take efforts to mitigate risks. For example, the Cayman Islands could avoid up to 90% of expected losses by implementing risk mitigation strategies such as construction sea walls.
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