Disaster risk insurance and the triple dividend of resilience

This working paper applies the triple dividend of resilience framework to disaster risk insurance, in order to explore the potential contribution that insurance can make to building resilience and driving development at different scales in developing countries. While it recognises that insurance is only one component of a larger toolbox of risk financing instruments and of disaster risk management more generally, this paper focuses on disaster risk insurance to add an evidence-based perspective on the (co-)benefits and costs of such mechanisms to the broader debate.

Insurance presents opportunities to improve disaster risk management, adapt to climate change and reduce poverty by generating broader benefits and providing financial security against disasters, including geophysical and climate-related events such as droughts or floods. Some of this enthusiasm may be misguided however. Financial infrastructure, regulatory frameworks and highquality risk data are often inadequate or non-existent in developing countries, insurance programmes often struggle to cover the most vulnerable, and insurance policies need to be carefully designed to incentivise disaster risk reduction investments. 

This working paper constitutes a critical business case for investments in the development, implementation and operation of disaster risk insurance approaches in developing countries.