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The G7 in partnership with the Vulnerable Twenty Group (V20) of Finance Ministers from the most climate vulnerable countries want to help close the protection gap for poor and vulnerable people against climate-related losses and damages. The aim is a Global Shield against Climate Risks by providing and facilitating more and better pre-arranged protection against climate and disaster related risks. To learn more about the Global Shield, have a look at the latest joint G7 and V20 information note.

This brief provides some initial guidance for those wanting to deepen their understanding of SRSP from a financing perspective; it is suitable for those involved in the design or funding of DRF instruments and approaches, who want to explore options of how to increase its impact and cost-effectiveness, for example through improved contingency planning. Given spiralling needs and the rising frequency and severity of climate disasters, it is imperative to make sure that every dollar of DRF support has the maximum possible impact on the lives of vulnerable people. SRSP offers some potential to help realise that aim.

The use of Climate and Disaster Risk Finance and Insurance (CDRFI) approaches has significantly increased in recent years. The increase in relevance and use is well-reflected in the IPCC’s Sixth Assessment report, which extensively covers the role CDRFI can play as a climate adaptation tool, as well as more detailed impacts and observations on the CDRFI sector’s response to climate change. The IPCC report comes with a Summary for Policymakers, a Technical Summary and the full report containing 18 chapters and 7 cross-chapter papers. This factsheet sheds light on the IPCC’s assessment of the role of Climate and Disaster Risk Finance and Insurance global climate change adaptation. It summarizes the key messages on CDRFI in Working Group II’s contribution on Impacts, Adaptation and Vulnerability to the IPCC’s Sixth Assessment Report (AR6).

Developing countries and small economies are facing the prospect of more frequent and devastating compound shocks, defined as multiple disruptive events—including natural disasters, economic and financial crises, and pandemics—striking simultaneously or in rapid sequence. Compound shocks are more devastating than isolated shocks. In many countries, compound shocks are taking place in a context of already tight fiscal constraints and financial fragility. The disaster risk finance architecture has evolved to respond to a growing diversity of shocks, but gaps remain. This note builds on WRI’s 2019 study (https://www.wri.org/publication/disaster-risk-pooling) on the future of disaster risk pools in developing countries which provided three broad options for strengthening the disaster risk finance architecture. This note provides more detail on how two of those options might be operationalized and adapted to a changing context.

Gender-smart Climate and Disaster Risk Finance and Insurance(CDRFI) lies at the convergence of multiple international and national policy priorities and commitments. Internationally, these include the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement; the 2030 Agenda for Sustainable Development and the UN Sustainable Development Goals (SDGs); and the Sendai Framework for Disaster Risk Reduction (the Sendai Framework). The InsuResilience Global Partnership (IGP) Vision 2025, supported by the Pro-poor Principles and the Declaration on Gender, unite policymakers from these diverse policy agendas under the common vision of building the resilience of the most vulnerable to climate change through financial protection. This document sets out an overview of these international commitments relevant to improving gender-smart CDRFI solutions as a starting point to advance global learning on the theme.It provides the conceptual background for our guidance note on translating international commitments into action to achieve gender-smart Climate Disaster Risk Finance and Insurance Solutions. This Policy Report is accompanied by the ‘Step by Step Guidance: How to translate international commitments into action to achieve gender-smart Climate Disaster Risk Finance and Insurance (CDRFI) Solutions.’

This factsheet explains how climate risk insurance works and why it is an important component of climate risk management. Climate risk insurance describes a suite of instruments for financial risk transfer that provides protection against risks arising from extreme weather events that are increasing in frequency and intensity because of climate change. The mechanism can offer regional entities, governments, institutions, companies, community groups, households and individuals protection against loss of life, livelihood or assets caused by extreme weather events. It ensures effective and rapid post-disaster payments to the insured individual, household, community group, company, institution, government or regional entity.

This factsheet explains the benefits, challenges and limitations of direct climate risk insurance schemes. The concept of “climate risk insurance” denotes the application of insurance instruments to risks associated with climate change. In direct insurance schemes policy holders such as micro, small and medium enterprises (MSMEs) or individuals pay a regular premium in exchange for a pre-defined payout or damage compensation in case of extreme weather events such as drought, storm, or flood. Policies are often sold at the local level and retailed through a variety of channels, including agribusinesses, financial institutions such as agri-lenders, banks, farmers’ cooperatives or local insurance companies and their agents. Payouts can serve various purposes, e.g. purchasing food to compensate harvest losses or payment of school fees.

At the first High-Level Consultative Group (HLCG) meeting of the InsuResilience Global Partnership (‘the Partnership’) held in December 2018, members agreed on the Concept Note of the InsuResilience Global Partnership and emphasized the urgency of scaling up and accelerating risk financing in 2019 and beyond. They mandated the drafting of a Workplan by the InsuResilience Secretariat to determine objectives and activities of the Partnership until 2025. This document sets out the overall vision and four Overarching streams for the Partnership by 2025.

The disaster risk management community has been advocating for integrated and complementary disaster risk financing approaches. In spite of this, macro and micro insurance schemes have struggled to find areas of common support. Theoretically, linkages could lead to process and resource efficiencies, ultimately enhancing the effectiveness of disaster risk management strategies. Being aware of the importance of this issue, the InsuResilience Secretariat has deemed it essential to foster reflection on this topic through a session at the Microinsurance Conference held in Lusaka during November 6-8, 2018. This discussion paper elaborates on some of the ideas discussed during the preparations and the event, and reflects on the challenges faced by policymakers, practitioners and the private sector when developing comprehensive risk transfer approaches. Additionally, these ideas are complemented with insights from the literature. Lastly, this paper provides guidance on how these linkages could be furthered in the future.

Even if the goal of limiting temperature rise to 1.5 °C will be achieved and serious adaptation measures are in place, extreme weathers will put people and their livelihoods under risk – especially the poorest and most vulnerable communities in developing countries. The need for managing these climate risks is becoming more pressing as global temperatures rise. Tools that have been gaining attention and promotion in recent years are climate risk insurance and insurance-related instruments. When designed carefully, they can buffer some of the risks by providing financial support in the aftermath of an extreme weather event. The Munich Climate Insurance Initiative (MCII) provided valuable input formulating seven pro-poor principles aiming to secure that insurance schemes are designed and implemented so that they do no harm and the poorest and most vulnerable can benefit from these schemes (Schäfer et al., 2016). While the call has furthermore been made for a human rights-based approach to climate risk insurance (ibid.), its embodiment still remains vague. This paper aims at helping to fill this gap. It presents conditions for and design choices of climate risk insurance and insurance-related instruments that can ensure an effective, efficient and human-rights-based contribution to climate risk management that benefits those most in need and discusses which actors to involve.