Here are five ways finance is trying to de-risk heat waves
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Despite these efforts to adapt, heat waves are putting costly burdens on businesses and individuals. To meet this problem, some financial service providers have started to offer instruments aimed at reducing personal and economic risk associated with heat waves. From heatstroke insurance to plans that reimburse dairy farmers when cows are too hot to produce milk, this new wave of products may help communities build financial resilience to the impact from warmer temperatures.
Here are five ways the financial industry is trying to de-risk the impact of more extreme heat waves.Heatstroke insurance
Japan’s Sumitomo Life Insurance, in collaboration with SoftBank Group’s mobile-payments unit PayPay, began offering heatstroke insurance last year and sold more than 60,000 policies.
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Recovering lost wages
This year India recorded its hottest February since 1901, and now forecasters are predicting a repeat of the intense heat wave last year that damaged crops and strained its power network. The country’s vast informal labor market, many of whom are women, are often exposed to dangerously hot conditions for extended periods of time.
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Crop insurance
Agriculture has always been at risk from drought and pests, but climate change is exacerbating those concerns.
Australian-based startup Hillridge Technology has developed a platform aimed at helping farmers assess their weather risk.
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Weather futures
Temperature-based index futures and options have offered a way for companies such as utilities to hedge against weather risks for more than two decades. In recent years, heightened awareness of climate-related risks has contributed to increased demand, according to CME Group, a provider of these contracts.
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