Mainstreaming climate risk insurance for widespread reduction of disaster risks

Context

In 2019, the increasing frequency and intensity of climate-change-related, extreme weather events was responsible for economic losses of more than 68 billion US dollars in India (Global Climate Risk Index, 2021). Models predict that the sub-continent is going to experience more such events, resulting in losses in multiple facets. To counter this, a range of mitigation and adaptation measures have been proposed, however those measures do not adequately address residual risks. Insurance as a risk transfer tool has emerged as a market-based mechanism to tackle some of these challenges. The resilience in vulnerable parts of the population can be improved by employing climate risk insurance that transfers residual risks arising from the adverse impacts of climate change.

Objective

Climate risk insurance is transferring climate risks as part of an integrated and comprehensive system of climate-risk management.

Approach

The project aims to support the incorporation of climate risk insurance into national and sub-national risk management strategies. Using a holistic approach, the efforts are accompanied by measures to raise awareness and build both the capabilities in climate risk insurance and allied tools for adaptation.

The project focuses on the following key aspects:

• fostering international exchange to promote expert and policy dialogue on innovative approaches to combat impacts of climate change and climate risks,
• enhancing and improving the abilities of competent authorities and research institutions for the technical application of climate risk insurance solutions,
• planning, implementing, and financing climate risk insurance (CRI) initiatives.

Last update: July 2023