Helping poor countries cope with climate change by risk-pooling through insurance

Science Daily: How will poor countries cope with climate change? Insurance solutions are pushed forward at the climate negotiations this week in Poznan. This is a critical juncture to build insurance mechanisms solidly into the architecture of the agreement that will emerge in Copenhagen next year.

In a plenary session Thurs. Dec. 4 negotiators examined how insurance mechanisms can help people adapt to climate-related risks. Negotiators listened to the Munich Climate Insurance Initiative (MCII) proposal to put insurance solutions into the emerging adaptation framework, together with prevention measures. Delegates received the proposal well and discussed it eagerly, agreeing for the urgent need to engage the private sector.

A growing number of business leaders see climate risk insurance as a tool to help people adapt to some of the unavoidable weather-related risks that accompany climate change. Peter Hoeppe, Head of the Geo Risks Research Department of Munich Re, stated "Developing countries are most vulnerable to climate extremes and they have contributed little to greenhouse gas emissions. They lack the financial resources to adapt to climate change. And they have hardly any capacity to manage and transfer the increasing risks they face."

A side event at the United Nations Climate Change Conference held in Poznan, Poland today highlighted climate risk insurance as a viable option for dampening the negative effects of global warming. Climate risk insurance solutions can reduce the financial risks caused by an increasing number of natural catastrophes. What is needed, experts agreed, is an insurance-related system to help poorer countries manage weather-related risks.

….Mr. Raphael P. Kabwaza, head of the delegation from Malawi, stated to the plenary, "Insurance can work for developing countries—we have proof of this with our microinsurance and other programs in Malawi. But we need partnerships with other countries and the international community to secure accurate data for our indexed-based tools. With that kind of cooperation, we are certain that coinsurance-related mechanisms can be an effective part of adaptation strategies."...