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NAture Insurance value:
Assessment and Demonstration
Steps towards operationalising the insurance value of ecosystems
Florentina NanuManaging Partner Business Development Group Romania
FIAR- The International Insurance-Reinsurance Forum,2019
Content
• About NAIAD: project purpose, objectives, added value, demo cases across Europe
• NAIAD collaborative approach
• Value proposition for the insurance sector
NAIAD Identity Card
• Research and demonstration project, funded by EU C
• Duration: 2016 -2019
• 23 partners / 11 countries / 9 demo sites
• Interdisciplinary partnership:
Universities and education research institutions : Research centers : Applied research focused SMEs : Public bodies : NGOs : Insurance sector representatives
• Project coordinated by:
Confédération hydrographique du Duero (ES), ICatalist (ES)
• External independed expert support via Advisory board, consisting of reputable experts from different fields and backgrounds
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 730497.
NAIAD: What we aim for
• Develop methods to assess the role of Nature BasedSolutions (NBS) in mitigation of water related risks andclimate change impact -e.g. hydro-economic models
• Assess and demonstrate NBS based strategiesto manage flood and drought risks at 9 demo sitesacross EU
• Explore the capacity of private and public decisionmakers to integrate NBS in risk management andplanning strategies
• Identify and develop business models and instrumentsfor implementation
• Uptake and mainstreaming of NAIAD results
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 730497.
NAIAD – Project Activities • multi-hazard risk modelling: Eco-Actuary and CoSting Nature
• big scale (basin level) to small areas (city/parts of a city)• for the use of authorities and insurance sector
• evaluation of the social risk perception• interviews and consultations with stakeholders on drivers and actions at
local level, modeling the preference for structural (green) and non structural measures
• Innovative economic and financial instruments and novel business models, • CBA, LCC, opportunity costs, avoided damage& co-benefits
• research on the insurance value of ecosystems, • evaluate national systems and the the extent to which they take into
account risks related to water / natural hazards and recognize green solutions as potential flood / desertification / erosion risk prevention solutions
• institutional analysis • 3 levels: EU, national and demo areas
• Integrated decision making instrument for the selection, development and implementation of green solutions • user-friendly products to support decision making at local level
• public policy recommendations
Damage valuation (CCR*)1. Damage assessment and damage curves calibration
2. Avoided damages estimation
objective: quantify value of NBS protection to support decision-making through risk modelling
CCR damage curves based on:• Max flood water depth• CCR estimation of insured value • Destruction rate based on historical flood claims (for
residential, professional claims etc.)• The results of simulation are back-tested by comparing the
simulated losses with the real losses for historical events
*David MONCOULON, [email protected] , Roxane MARCHAL, [email protected]
Paris October 2018
Avoided damage assessement methodsSTAGE 1HAZARD
STAGE 2NBS SCENARIOS
STAGE 3 ASSETS
STAGE 4DAMAGES
Estimate flood level/return periodwithout NBS
With x scenarios of NBS Estimate flood levelfor x scenarios
Assess damage & valuation NBS benefits
Different expected damage
Modify damage functions/!\ depend on the value and distribution of at-risk assets thatbenefit from the NBS
*David MONCOULON, [email protected] , Roxane MARCHAL, [email protected]
NAIAD Demo Sites (1)Location Focus
DENMARK, COPEHNHAGEN City of Copenhgen aims to develop a modelling framework to assess the insurance value of blue and green infrastructure ecosystems with respect to urban surface - and groundwatermanagement for the benefit of the citizens, water companies and various water users
FRANCE, ROHN – MEDITERRANEAN BASIN (Bièvres-Liers-Valloire)
Improved knowledge on torrential flood processes (wildfires and woody debris aggravation roles, etc.). Definition of alternative insurance business models and new multi-criteria decision making tools accounting for ecosystems and protection systems effectiveness
THE NETHERLANDS, ROTTERDAM The demo site will be used to design, develop and demonstrate the impact of applying a Micro Urban Wetlands strategy to prove the feasibility of decentralized solutions to collect, store, infiltrate and recover urban surface runoff as nature-based solution to prevent damages due to pluvial flooding and drought in the city of Rotterdam
POLAND, LODZ The demo aims at efficient water management towards multifunctional areas and to link thewater regulation with provisioning services for urban various use and users
SLOVENIA, GLINŠČICA The main aim is to prevent flooding but multiple benefits measures will be sought through ecosystem services among which aquifers recharge, irrigation and secure water management for all users
NAIAD Demo Sites (2)
Location Focus
SPAIN, DUERO BASIN The aim is to analyze and to value the role of groundwater‐related ecosystem services as natural insurance for hazard mitigation in a context of increasing climatic variability and to propose viable business options for the public/private financing of management measures that increase the provision of groundwater‐related ecosystem services
GREAT BRITAIN, THAMES The demo aim is to develop and test the eco:actuary policy support tool with project partners & stakeholders in London and surrounding towns. Key risks to be analyzed are urban drainage and upstream fluvial floods
FRANCE KARST Flood is the first risk in France (it represents almost 60 % of the total natural disasters). Drought risk for farming is supposed to increase in the future causing economic and financial problems to an industry already suffering. Extreme drought not only to affect the yearly crops with important yield and revenue losses but also to affect perennial crops and farm financial health for several years, potentially jeopardizing the survival of farms and implying resilience mechanisms
ROMANIA, LOWER DANUBE BASIN The main goal is to create an efficient network of stakeholders to apply collaborative protocols for water security measures implementation and promotion of sustainable development for extreme events mitigation by using the ecosystems services, ecological (re)construction and green solutions
300 km2
• Floods
• Drought
• Erosion
• Water Quality
• Desertification
ROMANIA: The Lower Danube Demo case
NAIAD - Collaborative Approach
NAIAD is a co-development project focused on understanding end-userspecific challenges, to better focus and fine tune the solutions, making itmore robust, replicable and transferable.
Exchange of information and better understanding of bio-physicalenvironment, enables better responses, predictions and thereforeforecasts in case of natural hazards, opening business opportunities forinsurance sector to develop new products or upgrade existing ones.
In connecting growing understanding of ecosystems and social innovation,private businesses can develop novel approaches to community ledbusiness initiatives, consultancy and RTD opportunities.
NAIAD - Collaborative Approach
Environment is changing – so are environmental risks.
Society is changing – so is the risk perception/aversion.
Policies are changing – e.g. Water directive.
CHANGE IS AN OPPORTUNITY
Around 90% of natural hazards are water related.
Costs of floods in EU are estimated at ca 5
BEUR/year and predicted to increase fivefold till
2050.
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 730497.
The value proposition for insurance sector
ICAR 2018-The challenge to recognize climate change as a driving change in the property insurance business:
• quantify the risks, expected losses and benefits: (extrapolating past trends are not accurate anymore)
• lower vulnerability and exposure by improved spatial planning and building standards
• increase the knowledge about hazards by linking to scientific / research institutes
• overlapping hazard maps with cadaster and cross-sector collaboration (water management, territorial development)
NAIAD - Collaborative Approach
• linking insurance with local authorities along with a clear definition of risk prone areas
• investments in flood prevention measures: (1) financing green/green-grey preventive measures, (2) insuring green/green-grey assets or (3) risk mitigation using green/green-grey interventions.
• updating the legal framework and increased awareness of the population on the importance of the insurance
NAIAD - Collaborative Approach
NAIAD Value PropositionGathering forces to improving resilience
to the increasing weather-related risk
Nature-based solutions for
catastrophic risk management-
opportunities for the insurance sector
Thank you!
www.naiad2020.euMore information on EU-wide partnership, expertise, relevance and
achievements
Details about specific NBS solution at 8 demos sites across EU
Data and info point
Join and share your views, expectations and suggestions with NAIAD
NAIAD2020 #NAIAD2020
Florentina NanuManaging Partner
Business Development Group [email protected]
www.bdgroup.ro
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 730497.The opinions expressed in this document reflect only the author’s view and in no way reflect the European Commission’s opinions.The European Commission is not responsible for any use that may be made of the information it contains.
