Frank Nutter, Reinsurance Association of America (RAA) President, has held his role at RAA since 1991. He currently serves on the Board of the International Hurricane Research Center; the Advisory Board of the Center for Health and the Global Environment, and adjunct to the Harvard University Medical School; the Council of the American Meteorological Society; and the Board of the University Center for Atmospheric Research sponsored by the National Science Foundation. He currently serves on the Advisory Board of the OECD’s International Network for the Financial Management of Large Scale Disasters and has served on the Board of the Bermuda Institute for Ocean Sciences.
Global Adaptation Institute (GAIN): Tell us about the Reinsurance Association of America (RAA).
Frank Nutter, Reinsurance Association of America President: The Reinsurance Association of America represents reinsurance companies that conduct business in the United States. Reinsurance companies insure insurance companies. They don’t deal with consumers at all, but they really become part of the capital financing mechanism for the industry. And, one major segment of what the industry does is provide financial support for insurance companies for natural catastrophe – earthquakes, hurricanes, tornados, large events that have multi-billion dollar consequences for consumers.
It is fairly common that 50 to 60 percent of those losses by insurance companies have probably been insured by reinsurance companies. So, if you take Hurricane Katrina for example, something like 60 percent of the losses that the insurance industry paid were ultimately born by reinsurance companies.
Karl Schultz is co-founder of the Higher Ground Foundation, a not-for-profit company dedicated to creating a market for climate adaption investment in developing countries. Higher Ground Foundation’s vision is a voluntary market for climate adaption projects, where projects earn climate vulnerability reduction ‘credits’ that can be bought and sold, similar to the voluntary carbon market’s verified emission reductions (VERs). The concept is attracting global interest, with a number of partnerships forming with development agencies, NGOs, scientific bodies and private companies. Schultz has started several businesses, including Climate Mitigation Works and Energy Edge, and co-founded Green Gas International, a clean energy technology and investment company now with over 450 employees around the world. Prior to that, he managed domestic and international climate programs at the U.S. Environmental Protection Agency.
Submitted by: Higher Ground Foundation
The Need for Adaptation Investment in Developing Countries
Climate adaptation finance is critical for many reasons. While everyone will be impacted by climate change, it will be the poor in developing countries most vulnerable to changes. With a lack of financial and technical resources, they will struggle to protect themselves from a growing number of threats, including more frequent and intense storms, droughts, sea level rise and the migration of vector-borne diseases. The estimated costs of adaptation extend to hundreds of billions per year. As a result, the international community has set a target of US$100 billion annually to fund both mitigation and adaptation.
Twenty-six people were killed, and more than 120 rescued after heavy rain and flooding occurred near the Filipino cities of Valenzuela and Malabon. Approximately 1.5 feet of rain fell on the Philippines during Tropical Storm Saola June 2.
Geoffrey K. Willis is a partner in the Real Estate, Land Use and Natural Resources and Environmental Practice Group with Sheppard Mullin. With years of experience advising the private and public sectors, Willis understands the roadblocks that can keep many corporations from swiftly embracing the adaptation agenda, as well as the incentives that can help business overcome this “inertia.”
Very often, companies I advise come to us when they plan to invest and are looking for three things: certainty, stability and fairness.
Certainty: If you don’t know what your legal or regulatory requirement will be it’s very hard to know how your investments will turn out and what your infrastructure costs will be.
There is nothing more convincing to people than facing risk themselves.
Last week as world leaders prepared for the start of the G20 Summit, an even more real event – a natural disaster – approached the host country of Mexico. The annual G20 Summit occurred June 18-19 and as that date approached, so did Hurricane Carlotta in its descent on Mexico and Central America.