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InsuResilience climate risk insurance initiative

Flash flood in Mozambique. People on their way to a gathering place at the Save river.

Climate change has an influence on the frequency and intensity of extreme weather events worldwide. Developing and emerging economies are particularly exposed, because the climatic changes are threatening to undo development progress. In September 2017, Hurricane Irma caused severe devastation: on the Caribbean island of Barbuda, 95 per cent of all building were destroyed. Thousands of people in the Caribbean lost their homes. Such events often also cause enormous financial damage. Economic losses caused by Hurricane Matthew in Haiti in 2016 amounted to one fifth of the country's gross domestic product – money that could have been invested in health, education or rural development.

As part of its development cooperation, Germany has been supporting climate risk management worldwide for a long time. However, even good risk analyses and preventive measures cannot completely avert damage caused by extreme weather events. Thus, comprehensive climate risk management also means developing strategies for coping with risks – such as the loss of livestock or damage to homes – that may become more common as a result of climate change. Climate risk insurance is one tool that can help people cope with the consequences of extreme weather events.

Risk of falling into poverty

Between 1980 and 2012, emerging and developing economies sustained ten per cent of all damage worldwide, but only one per cent of all insured damage. In consequence, 26 million people fall into poverty every year as a result of extreme weather events. Many do not only lose all their assets but also their livelihoods because they lose their crops or their cattle. This can result in illness, malnutrition and forced migration. This is where the G7 InsuResilience initiative comes in, which is being supported by the German government. The InsuResilience initiative seeks to achieve a massive increase in climate risk insurance cover for poor and vulnerable people in developing countries by 2020.

The Federal Ministry for Economic Cooperation and Development (BMZ) has been pursuing and enhancing this goal, including as part of Germany's G20 Presidency. In July 2017, the G20 members welcomed the creation of a Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions. The Partnership is to build on the InsuResilience initiative and help close the coverage gap.

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