MCII-GIZ: Innovative Insurance Solutions for Adapting to Climate Change

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    Maxime Souvignet

    In the context of climate change, the frequency and severity of extreme weather events and natural catastrophes are on the rise world-wide. Risk sharing and transfer instruments, such as insurance, are contributing to the efforts of governments and households to reduce the immediate and long-term financial impact associated with extreme weather events. They not only provide post-disaster liquidity for relief and reconstruction measures, but can also support ex ante measures to reduce vulnerability. A resilient climate risk management approach involves a balanced mix of approaches. In turn, insurance solutions should be designed and implemented as part of an integrated climate risk management approach. In the context of the international climate change negotiations, the Alliance of Small Island States (AOSIS) including Caribbean islands has championed proposals to include risk management and insurance in adaptation approaches. MCII has supported vulnerable countries and groups like AOSIS in exploring experiences of using and the technical details of weather-risk insurance linked to disaster risk reduction. With the creation of the SBI work program on loss and damage, at COP-16 in Cancun, Parties to the UNFCCC increasingly expressed their desire for more knowledge, practical examples and capacity support to address some elements of the work program such as risk management and risk transfer. In recent years, the international community continues to highlight risk management and insurance as a means to manage climate related risks during major international climate negotiations. Most notably, the Warsaw International Mechanism was established at the UNFCCC climate negotiations in November 2013 (the 19th Conference of the Parties) whereby an Executive Committee has been assigned a two-year work plan, with specific consideration to developing a comprehensive risk management approach including risk transfer tools such as insurance to address loss and damage as outlined in the Doha decision (3.CP/18), paras 6 and 7. To inform the policy discussion on comprehensive risk management approaches and to support climate negotiators in their short and long-term strategies to address loss and damage and link practical expertise more efficiently to the needs of policy makers, MCII is cooperating with GIZ on developing a strategic framework for low income countries and emerging economies to better assist climate negotiators in finding ways to implement climate risk insurance solutions in an integrated climate risk management approach.