By Michael F. Rellosa
SO, we all know that the Philippines is the preferred target of Pacific Ocean-born typhoons. On top of that, I am sure you have noticed or are noticing the increase in the number and ferocity of normal weather occurrences, said to be the result of climate change. Just the other day, there were video clips trending on social media of trees blowing away, vehicles pushed off course and wind-driven rain moving in all directions. On top of that, it showed the bottom tip of a tornado right smack in the middle of the San Lazaro district of Manila! This was not a named typhoon, this was merely your usual monsoon season, afternoon thunderstorm only this time on steroids. Scientists have been raising the alarm bells around the globe against our worsening weather, and I hope governments and the populace are listening.
We, in the insurance industry, are in the business of risk and we better take note not only of the elevated amount of risk, but of measures we can take or adopt that may help mitigate the risk itself or the damage that may result from the occurrence of such risk.
On Wednesday, July 6, 2022, groundbreaking research on how we insurers can improve our risk modeling and enhance the resilience of infrastructure to climate change by incorporating the economic value of coastal mangrove forests as natural storm barriers will be unveiled. For the environmental activists among us, this is a win-win as the study shows that mangroves are not just a powerful source of natural carbon capture and storage (one of if not the best carbon sinks), but they can save an estimated $65 billion per year in avoided losses from floods and storms and 50 times more cost-effective at resisting storms and storm surges than building concrete sea walls. In this report, we will see that in some coastal cities, mangroves can reduce up to 100 percent of the physical damage from storms and floods. The case studies show that "mangroves are particularly effective in their ability to absorb the impact of waves and storm surges: 100-meter-wide mangrove forests can reduce the height of waves by up to 70 percent, while 500-meter-wide forests can reduce it by up to 100 percent."
It is also an accepted fact that mangroves are also valuable as fertile breeding grounds for all kinds of sea life, commercial types of fish included. The Philippines is notorious for its air quality, and mangroves are the best air purifiers and source of oxygen. Among the countries in the world, the Philippines is blessed with the most mangroves, but because of ignorance and neglect, mangrove deforestation is also at its peak. If not addressed, we may lose all our mangroves within the next decade or so.
Earth Security, a think tank and sustainable finance company, in partnership with the Philippine Insurers and Reinsurers Association (PIRA), is collaborating to help make this study a reality. Alejandro Litovsky, the chief executive officer and founder of Earth Security as well as the study's lead author, said: "Financial and corporate decision-makers, without an understanding of nature-based solutions are missing out on the opportunity to develop the companies of the future; inspire clients and employees; build resilience to climate change, restore biodiversity and support and protect local communities." As for me, and I am sure of the entire PIRA membership, we recognize the strategic potential for our industry to factor coastal ecosystems into underwriting processes. PIRA supports Earth Security's work and innovative insights into the risk mitigation qualities of natural assets, helping build the resilience of the Philippines and the insurance sector to catastrophic weather events.
In the Philippines, as well as the world at large, industry practitioners have not yet begun to recognize the value of such natural assets, and these are not reflected in any existing CAT models used to price insurance policies. On top of this, these models are based on past data and do not specify climate change scenarios making it a challenge for modelers and the insurance and reinsurance clients they serve. As the industry squares up to the task of overhauling tired old models to address global warming, climate change and the risks that it exacerbates, the report offers a simple methodology for the industry to update itself, see the value of working with nature and turning this into an opportunity.
Source: manilatimes.net