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Climate Change Adaptation
Enhancement of resilience against disaster caused by climate change
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Due to a rise in the global average temperature, extreme weather events have been increasing in frequency, and it is thought that it will be difficult to avoid the effects in the future. Based on this recognition regarding the natural environment, we need to adjust our economic and social activities to reduce the impacts of climate change and adapt to it for the stability and growth of our society and economy. Accordingly, Mitsui Sumitomo Insurance will provide high value-added services by adding the functions of disaster prevention and supporting recovery from a natural disaster to the basic function of insurance, which is to compensate for damage sustained. Moreover, we will help companies and other organizations to formulate strategies to enhance their own resilience in consideration of the medium- to long-term impacts of climate change, thereby supporting the creation of sustainable businesses and a sustainable society.
Case1 : Compensating for the damage caused by abnormal and unstable weather
Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (AR6) addresses the rise in global average temperature will lead to more frequent and serious heat waves, heavy rains, flooding and droughts. It is the mission of insurance companies to provide prompt compensation for increasing damage caused by natural disasters. As one of our solutions, we provide “weather derivative” products. Mitsui Sumitomo Insurance is the first insurance company in Japan to sell weather derivatives. The weather derivative sets conditions for indicators of weather data, such as temperature, precipitation, wind speed, snow cover and sunshine hours, and pays compensation when the conditions are exceeded. Currently, in together with MSI Guaranteed Weather LLC, a subsidiary that deals with global weather risks, we are also providing weather risk products overseas using satellite observation data from NASA and other organizations. In Australia, in partnership with local InsurTech, we have recently developed a dedicated platform for customers to provide real-time, online weather index insurance quotes to farmers Traditional weather index insurance products have tended to cover only wildfires and hail, but through the newly developed platform, we offer products that also cover droughts, high and low temperatures and pre-harvest rainfall.
Case2 : Visualizing global natural disaster risks caused by climate change
Jupiter Intelligence | Predicting risk in a changing climate
In order to minimize social losses caused by natural disasters, it is necessary for companies to correctly identify their future natural disaster-related risks and develop appropriate strategies and investments to control and reduce the damage that could be caused by the materialization of those risks. To this end, companies are required to identify and disclose their disaster-related risks along with the impacts of climate change on their financial status. MS&AD InterRisk Research & Consulting, which is an MS&AD Insurance Group company that provides risk-related services, is providing quantitative assessment of natural disasters caused by climate change in collaboration with Jupiter Intelligence, a US startup that is widely known in the field of climate change risk analysis. This service can quantitatively assess the risk of future natural disasters anywhere in the world to an accuracy of 90 square meters based on climate change impact assessments using AI. Such predictions can be made for every five years until 2100, and for some natural disasters, their impact on financial performance can also be estimated in line with the information disclosure recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).
Provision of "Prediction Map Showing Changes in Flood Frequencies"
For flood risks, it is important to conduct analysis in consideration of the local geographical features, and not simply by predicting precipitation, which is a weather condition. In 2018, the MS&AD Insurance Group and MS&AD InterRisk Research & Consulting have teamed up with the University of Tokyo and the Shibaura Institute of Technology to undertake a Large-scale Assessment of Flood Risk Due to Climate Change (LaRC-Flood™) and published a Map of Forecasted Flood Frequency Change Due to Climate Change as part of this project. Using LaRC-Flood™, global changes in the frequency of floods can be simulated according to different greenhouse gas emissions scenarios for the identification of flood risks across a global supply chain. Predicting the business risks posed by climate change helps companies to examine climate change countermeasures for their supply chains and also to formulate their medium- to long-term business strategies.
Since 2021, receiving support from the New Energy and Industrial Technology Development Organization (NEDO), MS&AD InterRisk Research & Consulting has been conducting more advanced flood risk research and has accelerated research to create and utilize highly accurate global hazard maps that reflect the impact of climate change.
Case3 : For prompt recovery from the damage caused by natural disasters
Collaboration with local governments
Due to the increasing severity and frequency of natural disasters in recent years, it is becoming increasingly difficult for local governments to provide support for rebuilding the lives of disaster victims. In particular, it takes time to issue disaster victim certificates because local governments need to investigate the damage situation. To resolve these issues, in August 2021 we launched Support for Reconstructing Livelihoods of Flood Victims, which provides local governments with information on damage assessment conducted by our company with the consent of customers and helps them issue disaster victim certificates promptly and efficiently in the event of a water disaster. Moreover, in order to conduct a rapid flood disaster investigation, we have created a 3D model of the flooded area from images taken by a drone, and have started damage investigation, in which AI analyzes the flooding situation and investigates the height of flooding. As of the end of January 2022, we have concluded partnership agreements with nine local governments and are making proposals to local governments nationwide for the expansion of the introduction.
Case4 : Participation in publicly funded natural disaster compensation scheme in overseas
Only about 1/3 of the world's economic losses from natural disasters are covered by private insurance. The difference between the amount of economic losses and the amount of insurance coverage is called the protection gap. Mitsui Sumitomo Insurance continues to participate in the Pacific Catastrophe Risk Assessment and Financing Initiative, jointly established in 2013 by the Japanese government and the World Bank, as a company underwriting reinsurance for natural disaster risks. In developing countries in particular, it is difficult for victims themselves or their governments to narrow the protection gap. In order to meet the challenge presented by this situation, Mitsui Sumitomo Insurance has been cooperating with the governmental agencies of individual countries, the World Bank and the Japanese Ministry of Finance. One of the initiatives implemented is the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI), an insurance scheme established under the leadership of the World Bank. The purpose of this program is to promptly provide reconstruction funds to the countries and regions affected by natural disasters of a certain scale in the Pacific Island countries where insurance systems have not yet been established. Mitsui Sumitomo Insurance is the only insurance company that has continued to participate in the program since its establishment in 2013. We will continue to promote public-private partnership projects through our global network and work to resolve the social issues facing each country and region.

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