Weathering climate change: insurance solutions for more resilient communities
This publication addresses local communities exposed to the mounting challenges – and costs – of protecting lives and assets against extreme weather and other climate-related risks, ranging from more frequent and severe storms, floods, droughts and other natural disasters to sea level rise, crop failures, and water shortages. It specifically addresses the challenges they face is mobilising the requisite financing for adaptation and presents some innovative insurance solutions to deal with low-probability, high-severity weather events, providing a mechanism to finance a disaster before it strikes.
The report asserts that emerging countries can reduce local climate risks by combining prevention and risk transfer measures; and shows how climate risks can be transferred away from public budgets to the commercial insurance market, thus pre-financing disaster recovery efforts. The climate risk solutions introduced in the publication involve close collaboration with public and private sector partners and take the form of index insurance or parametric covers. The report states that, with low administrative costs and fast payouts, they offer an attractive alternative to traditional insurance policies.
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