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The role of the insurance industry in environmental policy in the Nordic countries

  • Publisert 02.11.2011
  • Sist oppdatert 04.11.2011
While insurance could be a relevant policy instrument in many areas of environmental policy, there are some areas with more potential than others. This study highlights the role of the insurance industry, as well as the role of insurance, as a tool in environmental policy.

Identified areas where insurance could be a viable solution for risk management include:

  • Where no policy requirement to reduce risks through specific obligations exists yet
  • Where risks involve high costs and lead to the actor being unable to meet these costs
  • Where current instruments are deemed ineffective
  • Where the role of state compensation is seen as diminishing

These are typically areas where there is little or no existing policy instrument to ensure risk management, where risks may be perceived as high, but there is uncertainty around the likelihood and consequences of risks. In these areas, insurance companies could provide valuable data and analysis to estimate the cost of risks to help policy decision making.

The results indicate that interaction has some clear benefits to offer for the two parties. This study provides insight to the environmental policy sector on how the insurance industry can be utilised within the policy development process and in relation to what issues. For the insurance industry, the research provides a summary of the opportunities and challenges of interaction with the environmental policy sector.


Holistic management of climate change

Holistic management of climate change was chosen as the main theme under the Finnish Presidency of the Nordic Council of Ministers in 2011. The aim was to strengthen and unify the Nordic countries’ role as a player in climate issues.


To achieve this, comprehensive and cross-sectoral commitment and cooperation is required. Reduction of risk to society caused by the environment as well as reduction of risk to the environment is one of the areas where overarching policy objectives and coordinating measures are needed. Neither the insurance industry’s risk assessment and risk management expertise nor the use of insurance as a policy instrument has been widely used in environmental policy in the Nordic countries.


This study was commissioned by Nordic Innovation at the request of the Nordic Council of Ministers to clarify the current and potential role of the insurance industry in Nordic countries’ environmental policy.

The study included a review of existing research complemented with primary data gathering through interviews. Policy areas where insurance could prove to be an effective tool for implementing environmental policy were identified. The findings indicate that interaction between the insurance industry and environmental policy actors has an important role to play in decision making on the most effective ways to manage environmental risks, in sharing data that both the environmental policy sector and insurance industry can benefit from, and in facilitating better understanding of environmental risks including raising public awareness.


The interaction and information flows between the insurance industry and environmental policy actors were categorised into three types: formal interaction; informal interaction; and information provision. These types differ with regard to the aims and objectives of the actors involved and the benefits and challenges associated with interaction. Analysis of the ways and the extent of which current interaction and information flows occur provides insight into what can be gained in environmental risk management through enhanced interaction.


This study was carried out by Gaia Consulting Ltd in the summer and autumn of 2011. The work was guided by an advisory group consisting of insurance industry representatives from the Nordic countries led by Mr. Marcus Zackrisson (Nordic Innovation) and Ms. Kaarina Huhtinen (Finnish Environment Institute).