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502 J.Linnerooth-Bayeret al.
fromEthiopia’sProductiveSafetyNetProgramandtheWorldFoodProgramme.An
innovativemicro-insuranceprogramforherdersinMongoliaisaffordableandviable
toinsurersduetoits layeredsystemofresponsibilityandpayment, includingherders
(whoretainsmall lossesorthelowestrisklayer), theprivateinsuranceindustry(risk-
basedpremiumpayments for themiddle layerof risk)andtaxpayers (for thehighest
risk layer). In addition to subsidies, micro-insurance is typicallymade affordable
by greatly reducing the cover offered.Amicro-insurance program inBangladesh,
Proshika, that insures savings against natural disasters limits claims to twice the
amount in the client’s savings account (Mechler et al. 2006). Similarly, a micro-
insuranceproject inMalawiwasmadeaffordablebylimitingcover to thecostof the
hybridseeds,whichprotects thebanksagainstdefaults for their seed loans,butdoes
notprotecthouseholdsagainstdrought losses (Linnerooth-Bayeret al. 2009).
Theextensive support formicro-insurance falls thus solidlyunder the insurance
principleof solidarity,where contributions to thepool aremade, not in accordance
withtherisksthatapplicantsbringtothepool,but typicallyaccordingtotheirability
topay thepremium.Climate-attributed impacts and riskswill likely continue tobe
framed as a humanitarian issue invoking solidarity, and not as an issue invoking
accountabilityor liability.
21.5.3 ExperienceofRegional InsurancePools forEquitably
Sharing theImpactsandRiskBurden
The question addressed in this section is to what extent the regional insurance
pools(CCRIF,ARCandPCRAFI)providetheirmemberswithanequitablecurative
response to climate-attributed losses and damages, keeping inmind that the pools
providecover togovernments,which in turn (and invaryingdegrees)providepost-
disastersupport tovulnerablehouseholds, farmsandSMEs.By‘equitable’weagain
refer to the threeprinciples relevant to insurance:mutuality, solidarityandaccount-
ability.Weask, thus,whopaysthepriceformembershipintheriskpools,andbased
onwhichequityprinciple?
All pools have received donor support, mostly through capitalisation, payment
of operational expenses, direct premium support or capacity building.While the
premiumsare therefore less thanwouldbe requiredwithout outside support, in the
caseofARCandCCRIFtherelativepremiums(theproportioneachmembercountry
pays to the pool) tend to bebasedon risk levels (i.e., there are no cross subsidies).
Thepoolsarethusbasedonsolidarity fromtheoutside,butmutuality indetermining
the relativepayments frommembers.ForARC,all insuredcountriespaypremiums
basedon riskestimates,while for settingupandoperating thepools support comes
from donor organisations. In other words, donors contribute to reducing some of
the loads on the insurance premium.ARC’s non-profitmutual insurance company
(not necessarily meaning the premiums are based onmutuality) is capitalised by
financial and development institutions, including the GermanDevelopment Bank
and theUKDepartment for InternationalDevelopment (DFID),whichmeans that
premiums are indirectly supported through a solidarity principle. For ARC, thus,
Loss and Damage from Climate Change
Concepts, Methods and Policy Options
- Title
- Loss and Damage from Climate Change
- Subtitle
- Concepts, Methods and Policy Options
- Authors
- Reinhard Mechler
- Laurens M. Bouwer
- Thomas Schinko
- Swenja Surminski
- JoAnne Linnerooth-Bayer
- Publisher
- Springer Open
- Date
- 2019
- Language
- English
- License
- CC BY 4.0
- ISBN
- 978-3-319-72026-5
- Size
- 16.0 x 24.0 cm
- Pages
- 580
- Keywords
- Environment, Climate change, Environmental law, Environmental policy, Risk management
- Categories
- International
- Naturwissenschaften Umwelt und Klima