Climate risk insurance is a type of insurance designed to mitigate the financial and other risk associated with climate change, especially phenomena like extreme weather.[1][2] [3] The insurance is often treated as a type of insurance needed for improving the climate resilience of poor and developing communities.[4][5][6] It provides post-disaster liquidity for relief and reconstruction measures while also preparing for the future measures in order to reduce climate change vulnerability. Insurance is considered an important climate change adaptation measure.
![](http://upload.wikimedia.org/wikipedia/commons/thumb/9/9a/Flooded_building_and_tree_trunk_in_the_muddy_water_of_the_Mekong_in_Si_Phan_Don%2C_Laos%2C_September_2019.jpg/220px-Flooded_building_and_tree_trunk_in_the_muddy_water_of_the_Mekong_in_Si_Phan_Don%2C_Laos%2C_September_2019.jpg)
Critics of the insurance, say that such insurance places the bulk of the economic burden on communities responsible for the least amount of carbon emissions.[5] For low-income countries, these insurance programmes can be expensive due to the high start-up costs and infrastructure requirements for the data collection.[7] It is theorised that high-premiums in high risk areas experiencing increased climate threats, would discourage settlement in those areas.[1] These programmes are also usually timely and financially inadequate, which could be an uncertainty to national budgets.[7] A considerable problem on a micro-level is that weather-related disasters usually affect whole regions or communities at the same time, resulting in a large number of claims simultaneously.[8] This means that it is needed to be sold on a very large, diversified scale.[8] However a well-designed climate risk insurance can act as a safety net for countries while improving resilience.[6][9]
The international community invested in developing further support for this kind of insurance through the InsuResilience Global Partnership launched at COP23.[5] That group, supports regional programs such as Climate Risk Adaptation and Insurance in the Caribbean (CRAIC) and international organizations like the Munich Climate Insurance Initiative.[5] The ACT Alliance published a guidebook for equitable and climate justice oriented model for climate risk insurance in 2020.[10]
Types of climate risk insurance
editFlood insurance
editThe rising climate change related risks, such as sea level rise, floods and windstorms, threaten the livability and affordability of the impacted areas.[11] This is why one of the more widely used forms of climate risk insurance is flood insurance, which provides coverage against loss caused by flooding.[11]
References
edit- ^ a b "7 things you need to know about climate risk insurance - Institute for Environment and Human Security". ehs.unu.edu. Retrieved 2020-11-08.
- ^ Kousky, Carolyn (5 October 2019). "The Role of Natural Disaster Insurance in Recovery and Risk Reduction". Annual Review of Resource Economics. 11 (1): 399–418. doi:10.1146/annurev-resource-100518-094028. ISSN 1941-1340. S2CID 159178389.
- ^ Hermann, Alexandra; Koferl, Peter; Mairhofer, Jan Phillip (September 2016). Climate Risk Insurance: New Approaches and Schemes (PDF). Allianz.
- ^ MAKING CLIMATE RISK INSURANCE WORK FOR THE MOST VULNERABLE: SEVEN GUIDING PRINCIPLES (PDF) (Report). MUNICH CLIMATE INSURANCE INITIATIVE. 2016.
- ^ a b c d Welle (www.dw.com), Deutsche. "Climate risk: Insuring against the inevitable | DW | 07.12.2018". DW.COM. Retrieved 2020-11-08.
- ^ a b Surminski, Swenja; Bouwer, Laurens M.; Linnerooth-Bayer, Joanne (April 2016). "How insurance can support climate resilience". Nature Climate Change. 6 (4): 333–334. Bibcode:2016NatCC...6..333S. doi:10.1038/nclimate2979. ISSN 1758-6798.
- ^ a b Warner, Koko. Innovative Insurance Solutions for Climate Change How to integrate climate risk insurance into a comprehensive climate risk management approach. OCLC 950715797.
- ^ a b Hermann, Alexandra (September 2016). "Climate Risk Insurance: New Approaches and Schemes" (PDF). Archived (PDF) from the original on 2020-11-13.
- ^ Kreft, Soenke (November 2017). "Climate Risk Insurance for Resilience: Assessing Countries' Implementation Plans" (PDF). Archived (PDF) from the original on 2019-12-20.
- ^ "Climate Risk Insurance and Risk Financing in the Context of Climate Justice - A Manual for Development and Humanitarian Aid Practitioners - World". ReliefWeb. 6 November 2020. Retrieved 2020-11-08.
- ^ a b Cremades, R.; Surminski, S.; Máñez Costa, M.; Hudson, P.; Shrivastava, P.; Gascoigne, J. (January 2018). "Using the adaptive cycle in climate-risk insurance to design resilient futures". Nature Climate Change. 8 (1): 4–7. Bibcode:2018NatCC...8....4C. doi:10.1038/s41558-017-0044-2. ISSN 1758-6798. S2CID 90343311.