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.