Storms, insurance, and climate change - An exploratory study of property damage, compensation, and climate adaptation
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- Master Thesis 
This thesis is structured around four research questions that explore different aspects of storms and how they affect the insurance sector. Due to climate change, extreme weather events, such as storms, are expected to occur more frequently and more intensely than before. This is quite costly in terms of compensation payouts for the insurance companies. The purpose of this thesis is to provide insight into the occurrence of storms, to what extent they cause damage, at what speeds they cause damage, and evaluate to what extent the insurance sector is able to incorporate this increased climate risk in their policies. Data from the Norwegian Natural Perils Pool and SSB have been used to explore which counties in Norway that have been hardest affected by storm-related damages over the years. As they vary considerably in size, the number of damages per building has been included to neutralize the importance of the area of a county and determine which areas that have been most affected by winds per building. Furthermore, data on wind measurements from different weather stations has been downloaded from the Norwegian Meteorological Institute and compared to the damage observations to determine what wind speeds that cause damage. At last, the non-life insurance contribution criteria from the EU Taxonomy have been validated against the current operation of the Norwegian Natural Perils Pool to identify the most apparent weaknesses of the scheme from a climate perspective. To answer the research questions, we have assessed a considerable amount of literature and discussed it in light of the observations from our data. Regarding the probability of wind damage for different wind strengths, we have used a practical approach and modeled the results in R. In sum, the research has shown that the occurrence of storms is highly challenging to predict but that certain areas are more prone to storms than others due to various climatic conditions. Despite the complexity, simple methods have often provided high accuracy and relatively good predictions on the wind strengths that cause damage. Nevertheless, the increased climate risk seems hard to incorporate into the insurance sector due to large uncertainties.