Climate and Disaster Risk Finance in the new IPCC report: InsuResilience Global Partnership releases factsheet
The Intergovernmental Panel on Climate Change (IPCC) is the most authoritative scientific body on climate change, providing the interface between climate science and policy. As part of its Sixth Assessment Report (AR6), the IPCC’s Working Group on Impacts, Vulnerability and Adaptation (Working Group II) just published its contribution to the report.
The report received substantive attention globally, as it paints a grim picture of current and future climate impacts. The science is ever more unambiguous on anthropogenic climate change impacts – both already felt and projected for different scenarios. These include more frequent and intense extreme weather events in almost all parts of the globe.
Climate and Disaster Risk Finance and Insurance (CDRFI) is one approach to build resilience to adverse impacts of climate change, and to avert minimize and address damages and losses from climate-related (as well as geophysical) hazards and extreme events. This message – advocated by the InsuResilience Global Partnership since its launch in 2017 – receives some strong backing in the IPCC report. The IPCC’s latest assessment of the role CDRFI can play in climate adaptation is summarized in this factsheet.
The factsheet highlights some key messages of the IPCC’s assessment of CDRFI’s contribution to climate change adaptation. The IPCC holds CDRFI to be among the key adaptation options, and calls for scaled-up insurance protection of vulnerable countries and segments of society. This call is in line with the goals of the InsuResilience Global Partnership (IGP), whose Vision 2025 aims for the coverage of 500 million people by CDRFI solutions by 2025. As a result, the IPCC presents the IGP as an example for publicly supported insurance initiatives.
The IPCC further provides a summary of barriers to greater risk finance and insurance uptake in different sectors and regions of the world. The InsuResilience Global Partnership, a V20-G20+ initiative, is working towards addressing and overcoming these. The IPCC’s recount of experiences with subsidized insurance premiums, for instance, relates to the recent InsuResilience Principles on SMART Premium and Capital Support for insurance solutions in vulnerable countries. Further, the IPCC calls for safeguards to avoid potential adverse side effects of insurance solutions, as ensured by the InsuResilience Pro-Poor Principles. The body also advocates the integration of risk transfer approaches with upstream interventions to reduce risks ex-ante – a topic that is promoted and brought to fruition by the InsuResilience Sectoral Communities on Integrated Resilience Approaches.
Given the potential resilience benefits that CDRFI bears, its contribution to national adaptation efforts should be well-designed and planned for as part of national adaptation policy processes. For this reason, the InsuResilience Global Partnership supports countries to integrate CDRFI into their National Adaptation Plans (NAPs) and Nationally Determined Contributions (NDCs).
Last but not least, the InsuResilience Global Partnership serves as a convening platform for CDRFI-related knowledge and guidance. While the IPCC report, for instance, laments that “there is no comprehensive overview of the number of people covered by such [CDRFI] schemes” (p.1764, specifically referring to the African continent), the InsuResilience M&E system – fed by annual reports of the IGP implementing programmes – aims to collect and synthesize information of this type (see World Map). Relatedly, the IPCC remarks that remaining knowledge gaps hinder greater uptake and effectiveness of CDRFI solutions in various contexts. In order to address this, the InsuResilience Global Partnership in 2021 launched the Strategic CDRFI Evidence Roadmap that sets out the strategic evidence priorities and will guide the community’s evidence generation efforts in the coming years.
In sum, the IPCC’s assessment of the potential for CDRFI to contribute to climate change adaptation and potential pitfalls to it holds important lessons for CDRFI stakeholders. In line with the IPCC recommendations, the InsuResilience Global Partnership will continue to promote evidence-based best practices to realize the potential CDRFI bears – as called for by the IPCC’s recognition that multi-stakeholder partnerships are needed to overcome siloes.
Download the Factsheet on CDRFI in the IPCC report here.