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The PIISA project develops new concepts, products, and services to foster climate change adaptation through insurance. PIISA pilot 1 aims to develop a business model for insurance that promotes the adoption of green roofs and other nature-based solutions (NBS)^{1 The European Commission defines NBS as “Solutions that are inspired and supported by nature, which are cost-effective, simultaneously provide environmental, social and economic benefits and help build resilience. Such solutions bring more, and more diverse, nature and natural features and processes into cities, landscapes and seascapes, through locally adapted, resource-efficient and systemic interventions.”} . To better understand the current situation of Dutch insurance providers, eight Dutch insurance companies were interviewed on the enablers and barriers of integrating NBS into insurance products for the built environment. These interviews, supplemented with topical literature, offer new insights into insurers’ needs and views.

The authors of the report, climate researcher and advisor Lisette Klok and climate advisor Simone Kroes from Climate Adaptation Services (CAS), discuss the interview results and their implications.

Is there limited potential for nature-based solutions in product portfolios?

Due to the rising number of claims related to climate change impacts, some insurers have begun incorporating NBS into their products. For example, insurance companies can offer discounts on NBS installations to homeowners. In the Netherlands, Interpolis offers green roofs for clients experiencing leaks due to extreme rainfall. Premium discounts and NBS-related tips for homeowners are other ways NBS can be integrated into insurance policies.

Based on the interviews, Klok and Kroes identified four major barriers hindering the development and adoption of NBS insurance products: the absence of a clear business case, limited awareness of climate risks and adaptation among both personnel and clients, lack of cross-sectoral approaches and partnerships, and unclear roles of insurers in climate change adaptation.

Lisette Klok notes that adaptation and NBS in the context of the built environment and increased precipitation are relatively new topics for the Dutch insurance sector, though climate issues are on the agenda for many. Most of the interviewed insurers saw only limited potential for NBS insurance products in the future, possibly due to uncertainty over an unfamiliar topic. Nonetheless, the insurers were motivated to learn more. Simone Kroes explains that insurers have varying levels of ambition regarding climate and sustainability, leading to differing needs and goals.

Multiple ways forward: raising awareness, good examples, and collaboration

Insurers recognised several enablers and incentives for offering NBS products. These include differentiating insurance premiums, such as offering premium discounts, or adjusting policy coverage based on whether NBS have been implemented. However, the offered discount would have to be significant to incentivise homeowners, which is often not the case given that insurance premiums are low regardless and thus such discounts only affect the premium marginally. Insurers can also use various informational methods to promote NBS to homeowners. If damage has already occurred, insurers can incentivise homeowners to implement NBS as part of the repairs, commonly referred to as the Build Back Better approach.

Of the six identified incentives, Klok and Kroes highlight three. First, insurers need examples of best practices, as knowledge about NBS in the insurance sector is limited and sometimes hard to access. Convincing insurers of the value of NBS is essential. Klok urges practitioners to share their experiences: “We would like to know more about best practices in Europe, of how nature-based solutions are stimulated by insurance companies to reduce climate risks in the built environment.” Kroes adds that this knowledge is particularly needed at the household level.

Second, both internal and external awareness of the benefits of NBS, climate risks, and climate change adaptation should be increased to help set up NBS-promoting products. On an organisational level, this affects how these topics can be addressed and integrated within the company. Kroes explains: “[The interviewees] often mentioned that internally within the organisations, they couldn’t really find other colleagues that also stressed the urgency of climate adaptation and risks, and thereby the realisation that action has to be taken.” Externally, providing homeowners with appropriate information to increase their understanding of risks and solutions can improve their willingness and ability to mitigate risks and implement suitable measures.

The final incentive emphasised by Klok and Kroes is collaboration, closely linked with increased awareness and sharing of examples. The interviewees are connected through the Dutch sector association for insurers (Verbond van Verzekeraars) and their platform for climate. Kroes notes that adaptation seems to be a joint effort for the insurers: “Every insurer has their own portfolio, aims, and the way they want to approach their clients, and I expected that to be very competitive . . . but because they are also united on this platform, they are really trying to find ways to collaborate.”

Cross-sectoral collaboration between insurers and other key stakeholders (such as local governments, the construction sector, and private businesses) is also needed to mainstream the adoption of adaptation measures, including NBS. Kroes emphasises that much can be achieved by finding the cross-linkages between sectors, such as more data and public financing. “Insurers are really aware of the importance of collaboration, but it is just hard to establish good partnerships,” Kroes continues. Klok adds that insurers have long collaborated with local governments on other risks, such as burglary and fire prevention, but collaboration on climate risks needs to become more mainstream.

Lisette Klok and Simone Kroes found the interviews highly interesting, as discussions with a wide range of insurers allowed them, as climate researchers, to learn more about the insurance world. This work enables an improved understanding of the needs of practitioners, and it helps to create a community where knowledge can more easily be disseminated between researchers and insurers.

Read the report “Dutch Insurers: Enablers and Barriers of Nature-based Solutions” here.

Authors

• Marika Huttunen, Tyrsky Consulting