Climate Change and Tourism - UNEP - Division of Technology ...

UNWTO, 9 July 2008
Impacts and Adaptation at Tourism Destinations
As an adaptive strategy, insurance against extreme weather events is critical for tourism, just as “[…]
weather and climate are ‘core businesses’ for the insurance industry”. 426, 427 From the perspective of
tourist destinations, insurance enables the industry to spread the burdens of those climate-related risks
which cannot be avoided by other adaptation measures. In turn, the insurance industry faces the prospect
of a growth in the number and size of claims from the tourism industry and tourists, as a consequence
of increases in extreme events and climate variability. 19 out of the 20 most costly natural disasters
(in terms of property insurance losses) in Australia have been weather related. Hailstorms in Sydney
in 1999 proved to be the most costly (AU$ 2.2 billion). Changes to the expected frequency of such
weather events are of considerable importance to the insurance industry. 428 Insurance claims relating
to climate and tourism, including mortality and sickness while travelling, increased accidents between
home and destination or at the tourist destination, structural damage to tourist facilities and hotels,
service interruptions, and large-scale bush or forest fires. Events like these drive up insurance premiums
potentially making them unaffordable for many (especially smaller) tourism operators. However, it
is possible to reduce premiums by proactive adaptation. Premiums for cyclone insurance in Fiji, for
example, can be reduced substantially if the insured party introduces measures such as improving
building structures, having emergency plans in place, conducting staff training (e.g., for evacuation
procedures), and making sufficient provisions for water, food and fuel storage. 429 Information exchange
between insurance companies, the tourism sector and those at risk from climate change is essential
in order to shape adaptation measures and premiums, and also to reduce uncertainty associated with
future risks.
The Association of British Insurers 430 estimates that even small increases in the intensity of hurricanes
in the Gulf of Mexico-Caribbean, typhoons in Japan, and windstorms in Europe could increase annual
damage costs in these major insurance markets by two-thirds by the end of the 21st century. To reflect
the changed risk, regional insurance premiums would need to increase an estimated 20 to 80% in the
Gulf of Mexico-Caribbean, 20 to 80% in Japan, and 0 to 15% in Western Europe.
Adaptation by the insurance sector is already occurring in the Caribbean and Gulf of Mexico. The move
of some insurers in the USA to reduce coverage in Florida and the Gulf of Mexico is an example of
a risk reduction strategy by the insurance industry. 431 One regional insurer in the Caribbean recently
dropped coverage of 48 beach front properties across the region and increased premiums an average of
16%. 432 Such changes in insurability will have major implications for future tourism reinvestment and
development in high hurricane risk regions like the Caribbean.
The extension of the regions with major tourism destinations that will be primary affected by extreme
climatic events highlights the need for awareness and preparedness for natural hazards at the local level
through systematic capacity building and strategies for disaster risk management.
Box 9 Adaptation to extreme events in Fiji 433, 434
Tourism destination and situation: Coastal tourist resorts, Fiji.
Climate change impact: Extreme wind events (cyclones) and storm surges leading to structural
damage and shoreline erosion.
Adaptation strategies: To prevent damage from storm surges and sea level rise, resorts are now
built at least 2.6 m above mean sea level and 30 m off the high tide mark (these standards might
be reviewed in the future). The building code prescribes that structures need to withstand wind
speeds of 60 km per hour. Again, the building code is under review. Individual businesses (at least
the larger resorts) have evacuation plans, insurance cover and procedures before the start of the
cyclone season, such as staff training, water and food storage, first aid kits, trimming of trees and
a direct line to the Meteorological Service for early warnings.
Organization implementing the adaptation strategy: A range of Government Departments
(e.g., Town and Country Planning, Ministry of Health, Fiji Meteorological Service) and tourism
businesses themselves.
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