Washington, D.C. – With climate change already influencing extreme weather events that cause hundreds of billions of dollars in losses, poorer nations are left particularly vulnerable. The Center for American Progress has released a paper discussing how the recent call by the Group of Seven countries, or G-7, to scale climate insurance around the globe will help those nations immediately cope with devastating extreme weather events.
Insurance and reinsurance companies are critical actors in private disaster-recovery financing. In recent years, natural disaster-related damage was nearly $400 bill worldwide, but only about $100 billion of that was covered by insurance or reinsurance. The G-7 recently set a goal of increasing the number of people in vulnerable countries that have access to direct or indirect insurance coverage by 400 million. This goal must be met with well-designed insurance products, the CAP paper argues.
“On Monday, the G-7 set an important goal of dramatically expanding the availability of risk insurance to help people in lower- and middle-income countries better cope with the increasingly severe impacts of climate change,” said Pete Ogden, Senior Fellow at the Center for American Progress. “Designed properly, risk insurance facilities can harness markets to help countries better cope with the costs of climate change while taking steps to reduce their vulnerability.”
Properly designed insurance programs will not only aid vulnerable nations in the short term by ensuring that they can provide essential services and shore up critical infrastructure, but they will also incentivize the building of the type of highly resilient infrastructure that every country will need as the extreme effects of climate change become more and more pronounced. These insurance mechanisms should not replace efforts to mitigate those effects in the form of lower carbon emitting policies. But they can leave nations better equipped to withstand the next bout of extreme weather.
Click here to read “Harnessing Insurance Markets to Enhance Climate Resilience” By Pete Ogden & Ben Bovarnick
For more information on this topic or to speak with an expert, contact Tom Caiazza at [email protected] or 202.481.7141.