Insurance gains clout as climate change solution for the poor

Insurance gains clout as climate change solution for the poor

Efforts to insure vulnerable people such as poor farmers against extreme weather and other climate risks are picking up pace, following a recent G7 commitment to extend cover in developing nations and a global insurance industry forum this week.

U.N. Secretary-General Ban Ki-moon told insurance executives in New York their businesses could play an important role in easing the financial burden associated with disasters and protecting those affected.

“As a major source of investment, much of it long-term, the insurance sector can and must play a strong role in shaping a more sustainable future“, he said in a speech.

That may be relatively straightforward in rich countries where household insurance penetration is high – although worsening floods, droughts and storms are complicating markets even there.

A much tougher challenge is how to reach millions of people in poor nations who lack access to financial services and cannot afford to pay premiums.

Worldwide there is a growing need to buffer against climate shocks. This is especially the case for low-income groups living on the frontlines of climate change,” said Koko Warner, executive director of the Munich Climate Insurance Initiative (MCII), which has been working for a decade on insurance solutions for vulnerable communities.

 

Source: Thomson Reuters Foundation

Date: June 2015

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Read U.N. Secretary-General Ban Ki-moon’ speech


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