Floating Ideas for Change

When a major oil rig explosion this past April sent millions of gallons of oil spewing into the Gulf of Mexico, the environmental and financial implications of this devastation were immediately clear. But a quieter assault is taking place against our marine eco-system; in this scenario, the scourge is climate change. Granted, the ramifications of climate change might not be as visibly extreme as those of an oil spill. Nevertheless, we are already seeing the real consequences of climate change on our oceans and the industries dependent upon their vitality.

When thinking about how to prevent the neg- ative impact of climate change and human activity on our oceans, the role of insurance companies doesn’t likely spring to mind. And yet, as experts in risk mitigation, these companies could have a logical role to play — especially in Canada.

FROM CLIMATE CHANGE TO CLAIMS

Bordered by the Pacific, Atlantic and Arctic oceans, Canada is home to the world’s largest coastline. Sea-related activity contributes more than $20 billion annually to the Canadian economy. But the increasing population and demand for marine resources is putting a greater strain on an already fragile eco-system.

Over the past two years, millions of sockeye salmon have vanished from the West Coast. In addition, the commercial cod fishery in the Atlantic is practically extinct. The exact causes for these events remain unknown, but possible factors include warmer temperatures, declining food supplies, increased fishing activity and the impact of aquaculture (also called aqua-farming) on marine life.

From an insurance perspective, declining fish stocks put financial pressures on the fishing industry. Falling revenues can lead to lapsed or decreased vessel maintenance; in turn, this increases risk to the insured and ultimately the insurer. In extreme circumstances, some customers choose to economize by simply not purchasing insurance for some aspect of their marine operations. A correlation exists between these increased risk exposures and an increase in marine claims. And this doesn’t just affect insurers: to prevent these kinds of risk exposures, public and governing bodies are under pressure to subsidize lost revenue. These concerns of Canada’s marine insurance industry were raised by RSA and Coast during a roundtable discussion with key marine stakeholders and the Minister of Fisheries and Oceans Gail Shea on Parliament Hill on World Oceans Day. RSA’s conservation partner, World Wildlife Fund-Canada (WWF-Canada), hosted the June 8 discussion.

CREATING MARINE PROTECTED AREAS

RSA is a global marine insurer underwriting shipping, cargo, aquaculture and fishing. As such, it has a unique insight into the challenges and opportunities facing businesses operating in and interacting with the marine sector. Because of this expertise, it was a logical fit for the company to sign on to fund a three-year marine conservation project with WWF-Canada.

RSA and WWF-Canada are working together to help conserve Canada’s oceans by creating a network of marine protected areas (MPAs). The network is intended to protect biologically important areas and build ecosystems that are more resilient to climate change. The mapping process will open the door for feedback and insight from all stakeholders to determine the right approaches to take to create a sustainable fishing industry for all. The MPAs will help to maintain a wide range of species; they will also benefit neighbouring communities by creating larger fish stocks and providing opportunities for eco-tourism. The goal is to create a healthy and productive marine environment, which will ultimately provide for a stronger economy in Canada.

GETTING INVOLVED

Critical to the success of this project is building awareness within the insurance industry, communities and government. We want to build support around these MPAs not only among local communities, but also among our marine-based clients. Such awareness is an important part of creating a healthy balance between conservation and industry. WWF considers the growth of fish stocks and the recovery of Atlantic cod to be a good indicator of the health of our oceans and proof of the project’s overall success.

However, for this to work, it’s important that all of those affected by climate change get involved. With marine-based industries already taking a hit, there is more buy-in now than ever before. We must rely on science and the experts to direct us in terms of what needs to be done.

Insurance is all about risk. The insurance industry is able to help customers understand the level of risk they face, underwrite that risk to give security and respond when the worst happens. The world’s changing climate presents a new set of risks. It’s important that insurance companies get involved in helping to understand and reduce these risks.

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Declining fish stocks put financial pressures on the fishing industry. Falling revenues lead to lapsed or decreased vessel maintenance, which increases risk to the insured and the insurer.