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Timing of insurance retreat

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After a series of natural disasters – from the Canterbury earthquakes to Cyclone Gabrielle – real doubt hangs over the insurance options available to some New Zealand homeowners.

Increasingly, homes in certain areas are becoming uninsurable – or difficult to insure, at least. Insurers have decided the risk is too high to make covering it financially viable, leaving affected homeowners vulnerable.

The question of how insurers can continue to offer policies – all the while managing the growing risk from natural disasters – is becoming hard to ignore.

Insurers will have to explore alternative models and innovate if New Zealand is to adapt to future change.

Cautious insurers

There’s no general requirement in New Zealand that insurers cover anyone’s home, or that anyone’s home actually be insured.

Body-corporate groups are one exception. They must insure the units they manage. Mortgage lenders can also require borrowers to take out home insurance as part of their lending conditions.

When homeowners do get insurance, the risk of certain losses from natural disasters is automatically covered by the Natural Hazards Commission (previously known as the Earthquake Commission).

Even if a home insurance policy were to contain wording that, on the face of it, excluded this public natural-disaster cover, the law would treat the cover as included. At the same time, payouts are only managed by insurers, not financed by them.

The Canterbury earthquakes cost insurers NZ$21 billion and the Natural Hazards Commission $10 billion. And the risk of natural disasters more generally may be making insurers too cautious. They’re increasingly pulling out of areas they consider “high risk”.

That said, there are changes on the horizon. From mid-2025, insurers will have a general duty to “treat consumers fairly”. The Financial Markets Authority – the body responsible for enforcing financial-markets law – may potentially regard refusing home insurance to any consumer as a breach of the duty.

In other words, the Financial Markets Authority may end up forcing insurers to cover most of the country’s homes.

Billion-dollar payouts: liquefaction in the Christchurch suburb of Bexley after the 2011 earthquake. Getty Images

New insurance options

Future-proofing home insurance options will depend on the public and private sectors working together.

Many of the potential solutions are specific to how insurers take risk on. An insurer may decrease your premiums as an incentive for you to “disaster-proof” your home. If you don’t, the insurer may increase your premiums and limit its payouts to you, with individualised excesses or caps.

The insurer may even offer “parametric” insurance, which pays out less than traditional insurance, but faster.

For example, imagine a home insurance policy that covers any earthquake having its epicentre within 500 kilometres of your home, and measuring magnitude six or higher.

A traditional policy would pay out based on how much loss was caused (according to a loss adjuster). A parametric policy would simply pay out a small, pre‑agreed sum, based on the fact the earthquake occurred at all.

A parametric policy wouldn’t require you to prove any actual “loss” – beyond the inconvenience of having your home in the disaster zone.

While parametric insurance is relatively new worldwide, it’s an efficient solution for managing the risk of natural-disaster damage.

Reinsurance, co-insurance and ‘cat bonds’

An insurer may also transfer risk to one or more other insurance businesses – such as a “reinsurer”. If the insurer has to make a payout to you for a claim, the reinsurer then has to make a payout to the insurer for a portion of it.

The insurer may even “co‑insure” the risk. Co‑insurance is where two or more insurers cover different portions of the same risk. So, if you have your home co‑insured, you will have two or more insurers, each responsible for a portion of any claim.

Then there is the potential to transfer insured risk to entities that aren’t even insurance businesses. In some countries (such as Bermuda, the Cayman Islands and Ireland), the insurer can turn the risk into a “catastrophe bond” (also known as a “cat bond”).

Under a cat bond, the insurer arranges for expert investors to lend it capital in return for interest on the loans. The insurer eventually repays the capital, unless there is a specific natural disaster. In that case, the insurer keeps the capital, enabling it to pay out to the affected customers.

The insurer may even use the cat bond to create a “virtuous cycle”. More specifically, the insurer may reinvest the capital in “a project that reduces or prevents loss from the insured climate-related risk” (such as flooding).

Disaster-proofing the insurance industry

Key to improving the situation will be the public and private sectors working together to make climate-related disasters less frequent – and less serious when they occur.

The United Nations’ Intergovernmental Panel on Climate Change has advised on how the sectors could minimise climate-related risk. But they also have similar progress to make to minimise the risk of natural-disaster damage more generally, particularly from earthquakes.

It is important to build homes that are better disaster-proofed. And it is also important to address a major problem that many people don’t necessarily view as related to insurance – the cost of housing.

If New Zealanders wishing to own their homes didn’t have to invest as much of their money in housing as they do, the risk of damage to housing might be of less concern. Natural disaster wouldn’t have to mean financial disaster as much as it does today.

In the meantime, innovative insurance options will become more and more necessary.The Conversation

Christopher Whitehead, Lecturer in Law, Auckland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Under a microscope, a tiny elongate poppy seed, small tan spikemoss megaspores and black soil fungus spheres found in soil recovered from under 2 miles of Greenland’s ice. Halley Mastro/University of Vermont, CC BY-ND

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Top image: Under a microscope, a tiny elongate poppy seed, small tan spikemoss megaspores and black soil fungus spheres found in soil recovered from under 2 miles of Greenland’s ice. Halley Mastro/University of Vermont, CC BY-ND Paul Bierman, University of Vermont and Halley Mastro, University of Vermont

 

As we focused our microscope on the soil sample for the first time, bits of organic material came into view: a tiny poppy seed, the compound eye of an insect, broken willow twigs and spikemoss spores. Dark-colored spheres produced by soil fungi dominated our view.

These were unmistakably the remains of an arctic tundra ecosystem – and proof that Greenland’s entire ice sheet disappeared more recently than people realize.

These tiny hints of past life came from a most unlikely place – a handful of soil that had been buried under 2 miles of ice below the summit of the Greenland ice sheet. Projections of future melting of the ice sheet are unambiguous: When the ice is gone at the summit, at least 90% of Greenland’s ice will have melted.

Four maps of Greenland show ice loss at various stages, calculated by model
Results of an ice sheet model show how much of Greenland’s ice sheet survives when the ice is gone from the Camp Century (white dot), GISP2 (red dot) and DYE-3 (black dot) ice coring sites. Modified from Schaefer et al., 2016, Nature

In 1993, drillers at the summit completed the Greenland Ice Sheet Project 2 ice core, or GISP2, nicknamed the two-mile time machine. The seeds, twigs and spores we found came from a few inches of soil at the bottom of that core — soil that had been tucked away dry, untouched for three decades in a windowless Colorado storage facility.

Our new analysis builds on the work of others who, over the past decade, have chipped away at the belief that Greenland’s ice sheet was present continuously since at least 2.6 million years ago when the Pleistocene ice ages began. In 2016, scientists measuring rare isotopes in rock from above and below the GISP2 soil sample used models to suggest that the ice had vanished at least once within the past 1.1 million years.

Now, by finding well-preserved tundra remains, we have confirmed that Greenland’s ice sheet had indeed melted before and exposed the land below the summit long enough for soil to form and for tundra to grow there. That tells us that the ice sheet is fragile and could melt again.

Drill dome on Greenland ice sheet
The GISP2 ice drilling camp at the Greenland ice sheet summit has an average temperature today of minus 7 degrees Fahrenheit (minus 22 Celsius). Christine Massey, CC BY
A rocky landscape with ice nearby.
The frozen plant remains suggest that the center of Greenland probably once looked like this dry rocky tundra, photographed in northwest Greenland. Paul Bierman/University of Vermont, CC BY-ND

A landscape with Arctic poppies and spikemosses

To the naked eye, the tiny bits of past life are unremarkable – dark flecks, floating between shiny grains of silt and sand. But, under the microscope, the story they tell is astounding. Together, the seeds, megaspores and insect parts paint a picture of a cold, dry and rocky environment that existed sometime in the past million years.

Above ground, Arctic poppies grew among the rocks. Atop each stalk of this small but tenacious herb, a single cupped flower tracked the Sun across the sky to make the most of each day’s light.

A photo of a yellow poppy next to a photo of a seed
The seed we found in the frozen soil retrieved from under 2 miles of ice, right, is from an arctic poppy, left. Arterra/Universal Images Group via Getty Images (left), Halley Mastro/University of Vermont (right)

Tiny insects buzzed above mats of diminutive rock spikemoss, creeping across the gravelly surface and bearing spores in summer.

A photo of spike moss and a photo shot under a microscope showing spheres that are spores.
Modern rock spikemoss (left) and rock spikemoss megaspores (tan spheres, right) from the GISP2 soil sample. J.F. Clovis/Courtesy of Smithsonian Institution (left), Halley Mastro/University of Vermont (right)

In the rocky soil were dark spheres called sclerotia, produced by fungi that team up with plants’ roots in soil to help both get the nutrients they need. Nearby, willow shrubs adapted to life in the harsh tundra with their small size and fuzzy hair covering their stems.

A photo of Arctic willow shrubs, which look nothing like willow trees, and a photo of a tiny wood piece under a microscope.
Three fragments of wood, shown under a high-power electron microscope, right, were Arctic willow – not from grand trees but rather the remains of ankle-high shrubs, left, that characterize Greenland’s tundra today. Peter Prokosch; (left), Barry Rock/University of New Hampshire (right)

Each of these living things left clues behind in that handful of soil – evidence that told us Greenland’s ice was once replaced by a hardy tundra ecosystem.

Greenland’s ice is fragile

Our discoveries, published on Aug. 5, 2024, in the Proceedings of the National Academy of Sciences, demonstrate that Greenland’s ice is vulnerable to melting at atmospheric carbon dioxide concentrations lower than today. Concerns about this vulnerability have driven scientists to study the ice sheet since the 1950s.

In the 1960s, a team of engineers extracted the world’s first deep ice core at Camp Century, a nuclear-powered Army base built into the ice sheet over 100 miles from the northwest Greenland coast. They studied the ice, but they had little use for the chunks of rock and soil brought up with the bottom of the core. Those were stored and then lost until 2019, when they were rediscovered in a lab freezer. Our team was among the scientists called in to analyze them.

A man in a fur-lined coat removes a long ice core about as wide as his hand
George Linkletter, working for the U.S. Army Corps of Engineers Cold Regions Research and Engineering Laboratory, examines a piece of ice core in the science trench at Camp Century. The base was shut down in 1966. U.S. Army Photograph

In the Camp Century soil, we also found plant and insect remains that had been frozen beneath the ice. Using rare isotopes and luminescence techniques, we were able to date them to a period about 400,000 years ago, when temperatures were similar to today.

Two microscope images show tiny plant parts. One a moss stem and the other a sedge seed.
Exquisitely preserved remains of 400,000-year-old moss, on the left, and a sedge seed, on the right – found in the soil core from beneath the Greenland ice sheet at Camp Century – help tell the story of what lived there when the ice was gone. Halley Mastro/University of Vermont

Another ice core, DYE-3 from south Greenland, contained DNA showing that spruce forests covered that part of the island at some point in the past million years.

The biological evidence makes a convincing case for the fragility of Greenland’s ice sheet. Together, the findings from three ice cores can only mean one thing: With the possible exception of a few mountainous areas to the east, ice must have melted off the entire island in the past million years.


Losing the ice sheet

When Greenland’s ice is gone, world geography changes – and that’s a problem for humanity.

As the ice sheet melts, sea level will eventually rise more than 23 feet, and coastal cities will flood. Most of Miami will be underwater, and so will much of Boston, New York, Mumbai and Jakarta.

Today, sea level is rising at more than an inch each decade, and in some places, several times faster. By 2100, when today’s kids are grandparents, sea level around the globe is likely to be several feet higher.


Using the past to understand the future

The rapid loss of ice is changing the Arctic. Data about past ecosystems, like we have collected from under Greenland’s ice, helps scientists understand how the ecology of the Arctic will change as the climate warms.

When temperatures rise, bright white snow melts and ice shrinks, exposing dark rock and soil that soaks up heat from the Sun. The Arctic is becoming greener with every passing year, thawing underlying permafrost and releasing more carbon that will further warm the planet.

The authors share their research and images of the ice core drilling. Quincy Massey-Bierman/University of Vermont.

Human-caused climate change is on pace to warm the Arctic and Greenland beyond temperatures they have experienced for millions of years. To save Greenland’s ice, studies show the world will need to stop greenhouse gas emissions from its energy systems and reduce carbon dioxide levels in the atmosphere.

Understanding the environmental conditions that triggered the ice sheet’s last disappearance, and how life on Greenland responded, will be crucial for gauging the future risks facing the ice sheet and coastal communities around the world.The Conversation

Paul Bierman, Fellow of the Gund Institute for Environment, Professor of Natural Resources and Environmental Science, University of Vermont and Halley Mastro, Graduate Fellow of the Gund Institute for Environment. Graduate Research Assistant in Natural Resources and Environmental Science, University of Vermont

This article is republished from The Conversation under a Creative Commons license. Read the original article.

carbon dioxide emissions

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This article is republished from The Conversation under a Creative Commons license. Read the original article.
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The COP28 climate summit in Dubai has adjourned. The result is “The UAE consensus” on fossil fuels.

This text, agreed upon by delegates from nearly 200 countries, calls for the world to move “away from fossil fuels in energy systems in a just, orderly and equitable manner”. Stronger demands to “phase out” fossil fuels were ultimately unsuccessful.

The agreement also acknowledges the need to phase down “unabated” coal burning and transition towards energy systems consistent with net zero emissions by 2050, while accelerating action in “the critical decade” of the 2020s.

As engineers and scientists who research the necessary changes to pull off this energy system transition, we believe this agreement falls short in addressing the use of fossil fuels at the heart of the climate crisis.

Such an approach is inconsistent with the scientific consensus on the urgency of drastically reducing fossil fuel consumption to limit global warming to 1.5°C.


‘Abated’ v ‘unabated’

The combustion of coal, oil and gas accounts for 75% of all global warming to date – and 90% of CO₂ emissions.

So what does the text actually ask countries to do with these fuels – and what loopholes might they exploit to continue using them well into the future?

Those countries advocating for the ongoing use of fossil fuels made every effort to add the term “unabated” whenever a fossil fuel phase-down or phase-out was proposed during negotiations.

“Abatement” in this context typically means using capture capture and storage technology to stop CO₂ emissions from engines and furnaces reaching the atmosphere.

However, there is no clear definition of what abatement would entail in the text. This ambiguity allows for a broad and and easily abused interpretation of what constitutes “abated” fossil fuel use.

Will capturing 30% or 60% of CO₂ emissions from burning a quantity of coal, oil or gas be sufficient? Or will fossil fuel use only be considered “abated” if 90% or more of these emissions are captured and stored permanently along with low leakage of “fugitive” emissions of the potent greenhouse gas methane, which can escape from oil and gas infrastructure?

This is important. Despite the agreement supposedly honouring “the science” on climate change, low capture rates with high residual and fugitive emissions are inconsistent with what research has shown is necessary to limit global warming to the internationally agreed guardrails of 1.5°C and 2°C above pre-industrial temperatures.

In a 2022 report, the Intergovernmental Panel on Climate Change (IPCC) indicated that almost all coal emissions and 33%-66% of natural gas emissions must be captured to be compatible with the 2015 Paris agreement.

That’s assuming that the world will have substantial means of sucking carbon (at least several billion tonnes a year) from the air in future decades. If these miracle machines fail to materialise, our research indicates that carbon capture would need to be near total on all fuels.

The fact that the distinction between “abated” and “unabated” fossil fuels has not been clarified is a missed opportunity to ensure the effectiveness of the Dubai agreement. This lack of clarity can prolong fossil fuel dependence under the guise of “abated” usage.

This would cause wider harm to the transition by allowing continued investment in fossil fuel infrastructure – new coal plants, for instance, as long as some of the carbon they emit is captured (abated) – thereby diverting resources from more sustainable power sources. This could hobble COP28’s other goal: to triple renewable energy capacity by 2030.

By not explicitly defining these terms, COP28 missed the chance to set a firm, scientifically-backed benchmark for future fossil fuel use.

The coming age of carbon dioxide removal

Since the world is increasingly likely to overshoot the temperature goals of the Paris agreement, we must actively remove more CO₂ from the atmosphere – with reforestation and direct air capture (DAC), among other methods – than is emitted in future.

Some carbon removal technologies, such as DAC, are very early in their development and scaling them up to remove the necessary quantity of CO₂ will be difficult. And this effort should not detract from the urgent need to reduce emissions in the first place. This balanced approach is vital to not only halt but reverse the trajectory of warming, aligning with the ambitious goals of the Paris agreement.

There has only really been one unambiguously successful UN climate summit: Paris 2015, when negotiations for a top-down agreement were ended and the era of collectively and voluntarily raising emissions cuts began.

A common commitment to “phase down and then out” clearly defined unabated fossil fuels was not reached at COP28, but it came close with many parties strongly in favour of it. It would not be surprising if coalitions of like-minded governments proceed with climate clubs to implement it.