A Strategy for Rolling out Climate De-risk Insurance through Regional Collaboration

Abstract

Abstract Most Asian countries exhibit modest income levels and low insurance penetration, while facing rising exposures to natural disasters due to climate change. This paper discusses a strategy for regional collaboration among Asian countries to build resilience through participation in a regional insurance pool. At the core of this strategy is a new type of Climate De-risk Insurance (CDRI) product, where a portion (10–20 %) of the premium is designated for risk assessment and mitigation as compared to conventional loss coverage. CDRI products are offered through commercial insurance companies in participating countries and distributed through a network of dedicated risk management agencies. CDRI insurance needs to be guided by enabling regulation, with greater emphasis on the effectiveness of the use of funds in risk mitigation and claims payments. Moreover, the CDRI development fund can be created in the form of a public-private partnership, as a means of mobilizing financial support for rolling out CDRI insurance.