When it comes to risk transfer tailored solutions that complement comprehensive risk management are best. Experience of others provides valuable lessons learned, practices and approaches which may be adjusted to fit your specific circumstances.
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The Philippines, one of the most disaster prone countries in the world, needed insurance to protect national government assets and help provinces respond more rapidly and effectively to the impact of natural disasters. The World Bank designed a customized parametric catastrophe risk insurance product for the Philippines that aims to provide fast liquidity after a natural disaster at the national level and to a pool of 25 provinces.
Review of Index-Based Insurance for Climate-Smart Agriculture: Improving climate risk transfer and management for Climate-Smart Agriculture — A review of existing examples of successful index-based insurance for scaling up.
This compilation of case studies deals with the climate-smart agriculture and its potential facilitation through index-based risk management tools, particularly targeted at local, most vulnerable farming communities in India, West Africa, the US and Nigeria. Further studies focus on two risk resilience projects (R4 Rural Resilience Initiative; Agriculture and Climate Risk Enterprise ACRE). The authors argue that index-based solutions must be adopted in a larger development-related context in order to be fully functional.
Vulnerability of microfinance institutions to climate risk in the Satkhira District, Southwest Bangladesh
This article examines the exposure of microfinance institutions to climate risks, here the risk of flooding in the Satkhira District in Southwest Bangladesh. The authors develop a framework for risk assessment and reduction in order to adapt to growing climate change risks. It is revealed that microfinance institutions should focus on client risk reduction in order to ensure profitability.
Strengthening insurance partnerships in the face of climate change – Insights from an agent-based model of flood insurance in the UK
This paper explores the concept of public-private insurance partnerships for improved flood risk reduction and risk transfer. The case study focuses on the flood-prone City of London and the Flood Re scheme. The authors reveal that flood insurance partnerships not only provide for risk transfer for flood risk, but may also help to facilitate more holistic flood risk management approaches without an exclusive focus on risk transfer.
This paper describes an application of re/insurance catastrophe modelling to estimates of the impacts of climate change on flood-related losses in Halifax Regional Municipality, Nova Scotia, Canada. This modelling technique, generally a proprietary tool developed in the private sector, is demonstrated to be of value to public policy planning processes and illustrates increases in annual flood losses in the coming century under ‘business-as-usual’, 2 degree and 4 degree warming scenarios.
This paper aims to answer three research questions for each of the three contexts assessed:
- What is the availability and use of financial services?
- How can financial services contribute to building climate resilience in terms of managing climate- related risks and exploiting climate-related opportunities?
- How can policy-makers support the development of financial services to build climate resilience?
Value Chain Analysis for Resilience in Drylands (VC-ARID): Identification of adaptation options in key sectors
Climate change threatens development and economic growth in semi-arid lands. Climate-related risks will increase for individuals, businesses
and infrastructure and have consequences in all sectors of the economy. Climate change will have significant impacts on economic activity and value
chains as economic actors are forced to alter their production systems to maintain their production capabilities under changing conditions.
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 we recognise 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.
The effective financial management of disaster risks is a key public policy challenge for governments around the world, particularly those faced with significant exposures to such risks and/or limited capacity to manage the financial impacts of natural and/or man-made disasters, such as floods, earthquakes, cyclones, terrorist attacks, industrial and technological accidents, and pandemics.
This article provides an overview of the potential implications of climate change for the financial management of disaster risks. It outlines the contribution of insurance to reducing the economic disruption of disaster events and policy approaches to supporting the penetration of disaster insurance coverage and the capacity of insurance markets to absorb disaster risks, including through the use of capital markets instruments and international co-operation in risk pooling.