“climate-resilient Agriculture Insurance: European Strategies And Benefits” – Guy Carpenter, PhD from Queen Mary University of London. In collaboration with Franziska Arnold-Dwyer, she announced a proposal to create a Climate Resilient Development Bond (CRD Bond), a new reinsurance structure to address climate risks at scale.

In a recent prospectus, the reinsurance broker outlined a CRD bond structure based on a new operating model aimed at improving financial stability and preventing losses from climate change-related weather risks.

“climate-resilient Agriculture Insurance: European Strategies And Benefits”

The draft proposes a combination of community-based insurance, cumulative investment and advanced financing of loss prevention measures, leveraging the Extended Insurance Linked Protection (ILS) framework, with insurance cover introduced by Guy Carpenter, on a parametric trigger basis.

Decline In Climate Resilience Of European Wheat

The goal is to cover the entire community, with municipalities receiving coverage from the insurance company for several years. In addition, the document states that the CRD policy includes a project fund account for a predetermined and approved project that specifically covers exposure to future losses from an insured event.

The idea is that capital markets play a key role. The program is re-insured through a special purpose insurance vehicle (SPI) that transfers risk to the capital market through bonds or bonds, thus a catastrophe bond vehicle or transformer.

Investor types can be commercial, ESG and philanthropic, and depending on the investor, the capital paid out can be fully risk-based or support part of the structural financing of the project.

Damage prevention projects include, for example, new flood defenses or wildlife-resilient habitats. The implementation of any damage prevention project during the life cycle of the bond ultimately contributes to improving the risk profile of the structure and reduces the probability of the event causing it.

E Shape At Eurogeo Workshop 2021

Once the bond expires, the remaining collateral is returned to the investors through a repayment mandate, depending on the type and risk/return profile of the investors.

Julian Enozzi, global head of public sector at Guy Carpenter, said: “We need to see a paradigm shift in how the (re)insurance industry responds to climate-related risks. CRD bonds provide a new type of framework that goes beyond traditional frameworks. response coverage for a truly integrated climate risk approach that combines financial protection against the impact of these risks with proactive support for loss prevention techniques.

“We believe that CRD bonds can effectively contribute to the implementation of sustainable and just solutions to the climate crisis. This helps to build financial stability and loss prevention capabilities within a mechanism that supports the principles of equity, sustainable development and cooperation,” added Dr. Arnold-Dwyer.

This CRD bond structure is similar to the flexible bond structure announced in 2015, including reduced risk. The latter failed to take off as planned, so it will be interesting to see how the ILS investor base reacts to the CRD bond structure.

In The Community

The document highlights the importance of the reinsurance sector in addressing climate change, saying it can rise to the challenge and “create a sea change” in its role.

The authors believe that CRD bonds are a sustainable solution as they combine financial stability and loss prevention measures with equity, sustainable development, cooperation and conservation principles underpinning the Paris Agreement.

Getting your daily reinsurance news from reinsurance news is just one easy way to get important reinsurance industry news delivered directly to your email inbox. As summer approaches in Europe, farmers across the continent are already feeling the heat, crops are failing. The alarming pace follows the hottest and driest months since records began. With production of key crops in Europe down by almost 10% this year, fears are growing about the future of the planet’s already shaky food security.

Food manufacturers have a similar outlook, as farmers everywhere are more at risk of financial ruin from adverse weather conditions today than at any time in nearly a century. To meet their needs, the agricultural insurance industry is not only growing, but also changing, with services that go beyond simple compensation for damaged crops. The agricultural insurance business seems that the agricultural insurance business can become an important tool in ensuring food security through programs that help farmers adapt to growing in unique conditions.

Future Shocks 2022: Safeguarding Eu And Global Food Security

Joseph Aschbacher, director general of the European Space Agency (ESA), said in an interview earlier this month that the current energy crisis will soon be dwarfed by the economic damage caused by climate change, requiring urgent action. . ESA has been monitoring climate-related events from orbit for years, and its scientists regularly suspect the effects of heat waves, forest fires, shrinking rivers and rising seas on Earth’s temperature on human economic activity, especially agriculture.

The interview took place amid a brutal summer for Europeans, with record temperatures, forest fires and significant droughts across the continent. Agricultural regions such as France, Italy and Spain are already seeing production declines, with soybeans, sunflowers and maize among the most affected crops, with experts warning of “summer inflation” – rising prices of staple foods caused by climate change . . The crisis has been exacerbated by the effects on world food markets of Russia’s war in Ukraine, which has revealed a modern system of agricultural production and distribution that is more vulnerable to shocks than previously thought.

The agricultural world is currently looking for ways to adapt to a future where such extreme weather patterns are becoming more common. This adaptation also includes an aspect that is often overlooked in public debate: agricultural insurance, which allows food producers to take out insurance when crop yields or market prices are affected by natural disasters, disasters such as wildfires, hurricanes and typhoons. in drought or vice versa. Market conditions such as oversupply.


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