From protection to prevention: The role of cooperative and mutual insurance in DRR

This report, prepared by the ICMIF-UNDRR collaboration, presents seven mechanisms gleaned from case studies compiled across the cooperative and mutual insurance sector and from a literature review on the role of insurance in supporting disaster risk reduction and resilience.

It focuses on preventing new risks and reducing existing risk is more urgent than ever because disasters can erase development gains and hinder progress, often for years to come, such as in the case of floods, hurricanes, earthquakes, pandemics or major technological disasters

The report presents seven mechanisms for supporting disaster risk reduction and resilience through cooperative and mutual insurance.

Direct mechanisms – for insurance products to reduce disaster risks:

1. Apply variable pricing of insurance to provide incentives for risk reduction

2. Include prerequisites and exemptions to provide incentives for risk reduction

3. Ensure investment reduces and prevents risk and builds resilience

Indirect mechanisms – for insurance providers to reduce disaster risks:

4. Raise awareness of the systemic nature of risks and provide transparent information and advice for reducing hazards, exposure, and vulnerability

5. Build and share capacity and technology for risk modelling, analysis and monitoring

6. Promote and enhance local social capital for responding to disasters and innovating to reduce risks

7. Collaborate with the public sector to signal unsustainable development and support decision making towards disaster risk reduction and risk-informed investment while closing protection gaps