Munich Re receives funding from German ministry for climate change initiative

Francesca Nyman in Insurance Insight: Munich Re has teamed up with the Caribbean Catastrophe Risk Insurance Facility and specialist microinsurance broker Micro Ensure to develop insurance solutions developing countries vulnerable to climate change.

The objective is to protect small farmers and day labourers from losing their livelihoods due to the impact of a hurricane or a flood by offering microinsurance and other risk transfer solutions linked with disaster risk reduction and risk management.

The project has received a €2m funding boost from the German Federal Ministry for the environment. Developing countries located in disaster-prone regions are particularly hard hit by the consequences of global climate change.The initiative will initially start in the Caribbean but aims to expand into other areas in the long term.

According to estimates from an Economics of Climate Adaptation study, losses caused by weather-related natural catastrophes already account for up to 6% of the annual gross national product in the five target countries - a figure that could increase by up to three percentage points by 2030, with hurricanes having the greatest loss potential in the region.

"Weather risk insurance-related solutions - among them microinsurances - can play a key role in providing swift and unbureaucratic recovery aid following major losses caused by such natural catastrophes, and thus safeguard livelihoods," Munich Re said.

"However, these approaches have so far experienced difficulties in reaching out to a larger proportion of the vulnerable population due to a shortage of information on local weather risks, insufficient risk management and risk transfer experience on the part of the initiators, and the lack of a clearly viable reinsurance concept," it added.

The organisations will operate under the umbrella of the Munich Climate Insurance Initiative. They aim to develop and market up to three different insurance products in the region in the next three years....

A plantation in the Dominican Republic, shot by Bree, Wikimedia Commons via Flickr, under the Creative Commons Attribution-Share Alike 2.0 Generic license