Climate change: A threat to local government insurability
DLA Piper, Brisbane Qld, Australia
Climate change poses a major challenge for local governments. Typically, a local government is the primary authority statutorily responsible for land use planning in its local government area. This responsibility brings with it the risk of legal liability for decisions made in accordance with these powers. Local governments manage this risk through their liability insurance.
This paper considers whether climate change poses a threat to local government insurability and how that threat might manifest, whether through a limitation on the availability of insurance cover or through affordability; and how the failure of a local government to adapt its decision making process sufficiently to respond to climate change can further increase the threat.
As some insurers adapt their business models in response to climate change we also consider how the consequent changes in insurance products and services might affect local governments, through such things as increasing the degree of disclosure required of local governments in order for insurers to assess the local government's insurability.
Finally we look at what local governments can do to avoid or minimise the threat to their insurability and what incentives insurance products and services could provide to influence the adaptive capacity-building behaviour of local government policy holders.