Meeting the Unmet Demand

Insuring the UninsurableClimate Change and Insurance

Munich Re – GERMANWATCH Briefing 2004

Arun KashyapClimate Change & CDM Adviser

UNDP10 May 2004

Presentation Format

Underlying PrincipleUnderlying Principle

Why, What, HowWhy, What, How Possible Strategy & Possible Strategy & InterventionsInterventions

Debt Swaps Linking disaster assistance with prevention/mitigation of adverse impacts of disasters

Next StepsNext Steps

Underlying Principle – Why? Millennium Development Goal

Halve the proportion of people living in extreme poverty by 2015

Water, Energy, Health, Agriculture & Biodiversity (WEHAB)

Climate Change - a cross cutting issuePossible basis for provision of insurance

services

Hypotheses Disasters contribute to persistent poverty Reducing vulnerability is about risk reduction and risk management Sustainable livelihood implies reduced vulnerabilities Disasters reduction efforts make economic and development sense Insurance as a safety net mechanism

can contribute towards overall economic development

Enhanced Vulnerability

Climate variability and change significantly endanger livelihoods Increase in the frequency and intensity of extreme events

Natural disasters Frequency and intensity of droughts

High human and economic costsin Developing Countries

Focus of Interventions --What?

Reducing vulnerability to shocks and stresses Strengthening sustainable livelihoods

Access to resources Building Assets

Developing capabilities

Focus of Interventions – How?

Adaptation (Risk management) interventions must be integrated in to national strategies

for poverty eradication Translating new and existing knowledge into policy formulation and implementation

Innovative and integrative approaches to capacity development

Undertake Pilot Projects

Possible Interventions

Disaster Management Continuum Priority Disaster Reduction

(Prevention, Mitigation and Preparedness)

Follow up Disaster Response (Relief, Rehabilitation, Reconstruction)

Debt for Adaptation Swaps(MDG)

Debt SwapsPublic Private Engagement

National Host Governments (Sustainable development priorities Bilateral (debt write off and terms of reference) Private Sector (Insurance possibilities – premiums nature of contracts) Multilateral organizations (Due Diligence) Civil Society (Due Diligence)

Learning by doing

Disaster ReductionPublic Private Engagement

National Host Governments (sustainable development priorities) Bilateral (Resource advancement from disaster mitigation budget)

Fulfilling Monterey commitment Engaging the Private Sector (Insurance possibilities)

Linking local action to global mandates

Transparency, Monitoring and Evaluation

Premise for Insurance Community/province/state level rather than household Guaranteed premium payment Diversification of risk

Partial Coverage of extreme events/natural disasters

Lessons from developed countries New Insurance products

Commercial debt insurance

Next Steps Strengthen Insurance & Sustainable Development linkage

Relationship: risk management, insurance and adaptive capacity Foster dialogue: Re/insurance industry,

governments and civil society Seek partnerships

Next Steps: Barbados+10

Risk Management, Adaptation and Insurance for SIDS

Comprehensive paper Side Event MoU Pilot Projects

Selection of Pilot Countries 

LDC/Highly Indebted Presence of basic infrastructure

Insurance industry Enabling policy framework Political commitment

Private sector/bilateral interest Direct Foreign Investment/Commercial Debt

Replicability