The key additional uncertainty introduced by increasing the scope of liability for environmental change arises as a result of the potential for sudden transitions in ecosystems and the value of the services they provide. If transitions and their effects could be predicted with confidence then they may be insurable. In our view, the uncertainties are currently too large.
Evidence from:
andrew@reliabilityoxford.co.uk
The real problems are:
• Pace of change, not change itself. Complex systems can be driven to the point where they become unstable and fail. All systems can be driven to the point where supply of ecosystem services cannot meet demand. The annual cost of adaptation or failing to adapt may become too high if the pace of change is too high.
• Reversibility of change. Complex systems will always self stabilise. The work required to move from a new state induced by the insured to a state regarded as the right state can be complex and disproportionate.
