Advancing and increasingly tangible climate change is forcing companies to take climate risk into account and, consequently, to purchase insurance from this area, e.g. weather insurance, not necessarily related to extreme events.
Example products are policies against bad weather for travel agencies, against a warm winter for heat and power plants or against too few sun hours for photovoltaic farms. The idea here is to prevent the risk of blackout (due to increased energy consumption by cooling equipment in hot summers) or water shortage for heat and power plants (due to droughts).
As for the former, according to calculations by the Polish Economic Institute, a 12-hour interruption in electricity supply nationwide in summer would involve a loss of almost PLN 4 bn. However, even local power cuts for a few hours can be disastrous for a large works.
On the subject of extreme weather events and their impact on business, they disrupt economic links and supply chains.
Thereupon, the main areas of insurance are:
- Property or crop insurance covering, for example, flood or drought.
- Parametric insurances used when other insurances contain significant exemptions for businesses. They are based on the occurrence of a specific event that threatens the activity of the business in question. The occurrence of this parameter (usually related to weather), not the damage, determines the amount of compensation. A reliable measurement of the parameter is therefore important. An example of this is car hail insurance for vehicles stored without shelter, where the parameter triggering the payment of compensation is hail stones of 3 cm in size.
- Appropriate risk management: it is about prevention and dispersal of risk.
It is also worth pinpointing the trend towards insuring against weather phenomena not generally considered to be dangerous, but which have a significant impact on business activity. Examples include insuring travel agents against bad weather, heating companies against warm winter weather, etc. Similarly, property insurance for photovoltaic and wind power installations will be structured: protecting both in the event of damage and low efficiency due to lack of sunlight.
