Insurance only part of disaster resilience, says climate change panel

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http://www.guardian.co.uk/global-development/2013/mar/06/insurance-disaster-resilience-climate-change


Pastoralist Abdille Muhamed with his dead cow in Garse Koftu village, Kenya. Would insurance have helped during the 2011 drought? Photograph: Jaspreet Kindra/IRIN

In most developing countries, farmers risk losing their crops and livestock to droughts or floods, and the recent intensity of these climatic shocks has been record-setting. As the losses from these events mount, the developing world has been turning to the experiences of richer nations in transferring risk through mechanisms such as insurance.

But experts – including the authoritative Intergovernmental Panel on Climate Change (IPCC) in its special report on managing the risks of extreme events and disasters to advance climate change adaptation (pdf) (SRex) – have sounded a note of caution in portraying insurance as a panacea for climatic shocks.

Even in the developed world, insurers are reluctant to provide regional or even nationwide coverage for floods and other natural hazards because of the systemic nature of those risks, the report pointed out.

Globally, only about 20% of the losses from weather-related events were insured between 1980 and 2003, the report said. In some countries, such as the Netherlands, which is exposed to high flood risk, insurance is non-existent; the government provides compensation.