Climate risk management

InsuResilience: Aim and successes

Parched soil

At the initiative of the German government, the G7 countries launched the "InsuResilience" initiative at their summit in Elmau in June 2015. Its purpose is to provide access to insurance against climate risks to an additional 400 million poor and vulnerable people in developing countries by 2020. When the InsuResilience initiative was launched, only about 100 million people in developing countries were insured against climate-related risks. The InsuResilience initiative is being implemented based on close cooperation with Germany's partner countries. Civil society, the insurance industry, international organisations and development banks are also important partners.

At the Paris climate negotiations in December 2015 (COP21), the G7 countries pledged a first round of support to the amount of 420 million US dollars for InsuResilience. At the Marrakech climate conference in November 2016 (COP22), the G7 and two new partners (the European Commission and the Netherlands) confirmed their commitment to support the initiative and pledged new funding, increasing the volume of support for the initiative from 420 to 550 million US dollars. The BMZ is providing 190 million euros of this amount.

How does climate risk insurance work?

Logo: InsuResilience

Climate risk insurance provides a financial safety net against the damage caused by extreme weather events, which are growing more frequent and more intense as a result of climate change. In direct insurance schemes, individuals or small businesses are insured against risks such as harvest loss. They then receive immediate assistance when needed. With indirect insurance schemes, a number of countries join together to form risk pools and insure each other against climate risks. When damage occurs, they quickly receive a pay-out that can then be passed on to those in need.

Why do we need a climate risk insurance initiative?

Insurance facilitates quick humanitarian aid and swift recovery after disasters. After a disaster, valuable time passes while the international community and aid organisations are working hard to raise money. Often, it takes weeks or even months before the survivors receive assistance. Climate risk insurance can be paid out within a few days. This saves people's lives and assets, and it protects development gains that have already been made. In other words, insurance schemes help to reduce poverty, attain sustainable development and also reduce the economic push factors of migration.

Climate risk insurance gives insurance holders the certainty that they will really receive assistance after a disaster, because once they have taken out insurance, they are legally entitled to compensation for losses incurred. This means that survivors of disasters are no longer reduced to supplicants. They can do something to secure their livelihoods.

Moreover, insurance policies provide incentives for preventive action and risk reduction measures. If an insured party takes action to reduce risks, for example building dykes to protect the coastline, the insurance premium may be lower. Insurance contracts are based on systematic risk assessments. This fosters the development of adaptation measures and disaster risk reduction measures. And regional risk pools require and/or foster the development of contingency plans. If a disaster occurs, such plans help guarantee an effective response and ensure that the funding paid out by the insurance is used effectively. Thus, people in need can benefit quickly from disbursements after a disaster.

Public-private partnerships can help put the resources of the insurance industry to use for the benefit of climate change adaptation and development. In that way, the private sector's expertise and access to data, risk models and capital can be tapped for the benefit of climate risk insurance schemes for poor and vulnerable people. For example, remote sensing instruments facilitate swift and nationwide damage assessment after an extreme weather event.

What kind of projects does InsuResilience support?

The initiative's ambitious goal is to be achieved through a combination of various measures in various regions. The focus is on expanding existing indirect risk insurance facilities and developing new insurance schemes in vulnerable regions. In addition, measures are undertaken to develop insurance markets in poor and vulnerable countries.

More information on the projects supported by InsuResilience can be found on the website of the initiative,

What has been achieved so far?

Since its start, InsuResilience has already achieved a great deal: based on the 550 million US dollars pledged, the initiative has been able to help expand existing insurance schemes and develop new schemes.

Indirect insurance

The African Risk Capacity (ARC) drought insurance, which was set up with support from the UK and Germany, will be expanded systematically under the InsuResilience initiative. A special feature of ARC is that each government prepares an contingency plan in which it defines in advance how insurance payments are to be deployed in the event of disaster. This makes it possible to provide assistance to survivors very quickly and in a targeted manner. With support from InsuResilience, new insurance products providing cover against floods and heavy winds are currently being developed.

The BMZ also uses InsuResilience to support humanitarian actors such as the United Nations World Food Programme (WFP) and the Start Network so that they can take out insurance from the African Risk Capacity (ARC). This makes it possible to pay out additional resources in an emergency that can be used by WFP or other humanitarian organisations. (This model is called ARC Replica Coverage.) In this way, climate risk insurance can become an important element of the reform of the humanitarian system, which focuses on planning ahead and mobilising additional funds for needy people.

For the Pacific region, G7 members Germany, the United Kingdom, the USA and Japan joined with the Pacific island states and the World Bank in June 2016 to found a new risk insurance programme, the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI). PCRAFI offers insurance products to cover tropical cyclones and earthquakes. Five island states are already policyholders: the Cook Islands, Vanuatu, Tonga, the Marshall Islands and Samoa. Further countries are expected to join in the near future.

With support from InsuResilience, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has been expanded to include Central America. Nicaragua was the first Central American country to join, in 2016. CCRIF offers coverage against hurricanes and earthquakes. Thanks to InsuResilience, it has been able to also include heavy rains in its insurance products. Following Hurricane Matthew in October 2016, Haiti received more than 23.4 million US dollars from CCRIF within two weeks after the disaster, enabling the country to provide food and emergency shelter for 1.4 million people, buy medicines for children and restore the roofs of schools, churches and courthouses. Most recently, more than 50 million US dollars were paid out to Antigua and Barbuda, Anguilla, Saint Kitts and Nevis, the Turks and Caicos Islands, Haiti, the Bahamas and Dominica following the devastation wreaked by the Hurricanes Irma and Maria in September 2017. Since its establishment in 2007, CCRIF has thus already paid out more than 100 million US dollars to 12 of its 17 member countries to help them cope with extreme weather events quickly.

Direct insurance

With support from Germany, policy recommendations are being drawn up as part of the InsuResilience initiative to advise policymakers on how to design the insurance market environment in developing countries. Private enterprises are important partners in this regard – not only because they are able to provide risk capital but also because they have knowledge, data and innovative technologies.

The initiative also supports the development of sustainable climate risk insurance solutions for private market players such as insurance companies and for government institutions through information campaigns for the broader public and through supporting innovative approaches (such as mobile technology) to reach specifically the poor and vulnerable people. The focus is currently on Zambia, India and Paraguay.

  • In Zambia, InsuResilience supports the the sustainability of the insurance solution provided by NWK Agri-Services cotton company, which offers insurance products to small contract farmers to cover weather events and funerals. In 2015 and 2016, some 52,000 farmers decided to buy insurance on credit. Following a large-scale drought in 2016, more than 23,000 farmers received payments totalling over 200,000 US dollars.
  • In India, there are plans for offering a new climate risk insurance component together with a simple health insurance product and a savings product. The products are to be offered to labourers, micro entrepreneurs and farmers. Coverage does not only include the loss of assets such as homes but also loss of income.
  • In Paraguay, an agreement was concluded with a local microfinance institution in July 2017 for the development of an agricultural and life insurance model in combination with loans. This will target smallholders in eastern Paraguay who raise crops and/or keep cattle.

 For an overview of all projects supported by InsuResilience, visit

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