Insurance is an under-used way for the tourism industry to manage the risks of climate change, with existing offers ranging from a “perfect weather guarantee” by Barbados to ski resorts promising deep snow, experts say.
“Insurance products…have a huge potential for tourism,” Daniel Scott, chair of a team on tourism and climate for the U.N.’s World Meteorological Organization, told Reuters at a climate conference in Geneva.
“It’s coming but it’s been under-utilized. Many operators do not even know about it,” said Scott, who works at the University of Waterloo in Canada.
The 150-nation conference in Geneva from Aug. 31-Sept. 4 is seeking to boost the flow of climate information to help nations adapt to shifts such as droughts, storms or rising seas that will affect everything from farming to health. [See IJ web site – https://www.insurancejournal.com/news/international/2009/09/01/103421.htm].
A U.N.-commissioned survey led by Scott of weather-related insurance in recent years includes Barbados’ guarantee, refunding travelers if daytime temperatures are below 26 Celsius (78.8 F) or there is more than 5 mm (0.2 inch) of rain. Temperatures for the Caribbean island were forecast to be around 32 C (89.6 F) for Wednesday.
Some ski resorts in Europe and North America offer a refund if snowfall is inadequate. Bombardier Motor Corp. in Canada promised a partial refund on new snowmobiles if snowfall was less than 50 percent of a three-year average.
One PGA Golf event in North Carolina bought insurance against too much rain that would keep spectators away. Some holiday operators offer insurance against rain on holiday.
WINE BARS
A chain of wine bars in London took insurance for every Thursday and Friday when temperatures did not reach 24 C (75.2 F), reckoning chilly days keep drinkers away.
“Much more should be done to mainstream climate considerations into tourism policy,” said Alain Dupeyras of the Organization for Economic Cooperation and Development.
Experts say the tourism industry is one of the most exposed to climate change that is set to disrupt rain patterns, push up sea levels that could wash away beaches or warm the oceans and damage coral reefs.
Among hurdles, developing nations find it hard to get access to proper insurance because of a lack of historical weather data, such as cyclones, on which to calculate risks. And those risks are changing with global warming.
“Most Caribbean islands don’t have a risk profile,” said Ulric Trotz, science adviser to the Caribbean Community Climate Change Centre. That meant their risks were assumed to be the same as for the U.S. Gulf coast.
“When Hurricane Andrew hit the southern United States the premiums for all the Caribbean rose,” he said, referring to the devastating 1992 storm. There was also a need to consider micro-insurance for tourism workers who could lose jobs.
Tourism generated $735 billion in revenues worldwide in 2006, of which $221 billion was in developing nations, according to U.N. data. Some tropical island states rely on tourism for half their gross domestic product.
Scott said that it was hard to estimate the overall value of tourism insurance but it was a tiny part of the market for weather derivatives — estimated at $32 billion in 2007-08 and dominated by agriculture and energy clients.
(Editing by Mark Trevelyan)
Topics Climate Change
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