Page - 506 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options
Image of the Page - 506 -
Text of the Page - 506 -
506 J.Linnerooth-Bayeret al.
nerablecountryaspirationsfortheWIM.Mutuality,however, isnotafeatureofmost
donor-supportedmicro-insuranceand regional insurancepools.
Achallengewith the solidarityprinciple, ifpremiumsaresubsidised, is the less-
enedincentiveforpolicyholders toreducetheirrisk. Inmeetingthischallenge, inter-
national financial institutions, development agencies andother donorswill need to
reconcile the contending equity and preventative objectives in their support of cli-
mateinsuranceprograms.Thisisforemostachallengeindesigning“smart”insurance
programs that are considered equitable and at the same time provide incentives or
directives to their clients to reduce risks.
Twooftencitedsuccessstoriesforinsuranceinstrumentsservingthemostvulner-
able theAfricanR4micro-insuranceprogramandtheAfricanRiskCapacity (ARC)
regional insurancepool, goa longway incombining thesegoals.Neither is a com-
mercialinsuranceenterprise;neitheris(fully)characterisedbyrisk-basedpremiums;
andbotharehighlysubsidised.TheR4program’ssuccesshasbeenattributedinlarge
part toitscloseconnectionwithpublicsafetynetprogramsintheparticipatingcoun-
tries,andtheARCcanattributeitssuccesslargelytoitsrequireddisbursementplans.
As evidenceof extremeclimate-attributed impacts and risks becomesmorewidely
available andaccepted,ARC’s innovativeXCFprogrammayserveasaconduit for
institutionalisingdonor support in the formof increasedpool capitalisation.
The provision of support to regional insurance pools andmicro-insurance pro-
grams continues to be framed as humanitarian aid, not invoking accountability or
liability for climate-attributed loss anddamage. Indeed, support for insurance pro-
gramshas comemainly fromdevelopment andfinancial organisations, such as the
WorldBank, national development partners, and internationalNGOs,with empha-
sis on thepotential role of insurance in supportingpoverty reduction in the face of
climateanddisaster risks. Inotherwords, thenarrative for supporthasbeen framed
asahumanitariananddevelopment issue.
Theinsurancediscoursemay,however,bechanging.Thisisperhapsmostapparent
indiscussionsontherecentG7InitiativeonClimateRiskInsurance(InsuResilience),
whichhas theambitiousgoalof increasingaccess todirector indirectclimate insur-
ance coverage for up to 400million of themost vulnerable people in developing
countries by2020 (G72015; InsuResilience 2017).While InsuResilience does not
officially commit to any specific equityprinciple, there are anumberof voices that
raise this aspect.Oneexample is theMunichClimate Insurance Initiative (MCII), a
close advisor to InsuResilience.MCII is forthright about the need togroundfinan-
cial support in ethical claims of accountability and also capability. In thewords of
thisNGO(whosemembersincludeinsurers,NGOsandresearchers), InsuResilience
shouldprovide technicalandfinancial support to theset-upandmaintenanceof risk
facilities and pools, the capitalisation of national and regional risk pools andother
formsof co-financing premiums.This support should follow the principles of “ca-
pability, including sharing the risks imposed by climate change and responsibility
for climate change impacts” (Schäfer andWaters 2016).TheG7 initiative has thus
unleashed a broad-ranging discussion onwho should pay for insurance, sovereign
risk transfer andsocialprotectionsystems in lightofclimatechange. Inacommen-
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