Insurance, developing countries and climate change

Linnerooth-Bayer, J., Warner, K., Bals, C., Hoeppe, P., Burton, I., Loster, T., & Haas, A. (2009). Insurance, developing countries and climate change. The Geneva Papers on Risk and Insurance 34 (3) 381-400. 10.1057/gpp.2009.15.

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By providing financial security against droughts, floods, tropical cyclones and other forms of weather extremes, insurance instruments present an opportunity for developing countries in their concurrent efforts to reduce poverty and adapt to climate change. By pricing risk, insurance provides incentives for reducing risks and adapting to climate change; if these premiums are not affordable to the most vulnerable, doors can combine premium support with risk-reduction measures. In this paper, we examine the costs, benefits and risks of public-private (and donor supported) insurance programmes that offer affordable economic security to vulnerable communities and governments. Insurance mechanisms are of particular interest to climate negotiators seeking strategies that help vulnerable countries adapt to increasing severity and frequency of weather disasters, and we examine the case for including insurance mechanisms in a climate adaptation strategy expected to be agreed in Copenhagen in 2009. We present a proposal for this purpose that has been recently put forward by the Munich Climate Insurance Initiative (MCII), which calls for international solidarity for very low probability and high consequence weather-related events (high-risk layer). For middle-layer risks the MCII proposal calls for international support to promote sustainable, affordable and incentive-compatible insurance programmes that serve the poor without crowding out private sector involvement.

Item Type: Article
Uncontrolled Keywords: Climate adaptation; Climate negotiations; Disaster prevention; Insurance; Risk reduction; Risk transfer; Weather extremes
Research Programs: Risk and Vulnerability (RAV)
Bibliographic Reference: The Geneva Papers; 34(3):381-400 (July 2009)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:41
Last Modified: 27 Aug 2021 17:38

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