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Innovative Insurance, Financial and Institutional Mechanisms to Address Climate Harm Beyond the Limits of Adaptation

David Estrin, CIGI; Sue Vern Tan, CIGI; Roger-Mark De Souza, Wilson Center; Melody Braun, IRI; Saleemul Huq, ICCCAD; Masroora Haque, ICCCAD; Dominique

A two-day workshop brought together 30 individuals
representing the following stakeholder groups: insurance
industry, governments and intergovernmental organizations,
international development banks and financial institutions,
non-governmental organizations (NGOs), research and think
tank organizations, as well as academics, to explore the role
and limitations of insurance, existing international funds and
other innovative concepts to address catastrophic as well as
slow-onset climate-related loss and damage (L&D).
Four broad conclusions emerged from the discussions that
took place during the workshop.
• Insurance is not a silver bullet. Insurance can be effective
in providing not only risk transfer but also risk assessment
and risk-management solutions. Nevertheless, it must be
coupled with other measures that can help in building
• Insurance solutions are only viable if parties are capable
of paying the premiums. Whether insurance should be
subsidized remains a critical issue. Innovative “insurance
for work” strategies (such as Oxfam and the World
Food Programme) are one way to ensure accessibility to
insurance. Nevertheless, from a climate justice perspective,
those responsible for contributing to climate change
should also contribute toward the premiums. Even at
the sovereign level, the payment of insurance premiums
for regional risk pools on a continuing basis could be a
potential issue affecting the sustainability of these programs
as governments face competing financial priorities (such as
health and education) in their national budgets.
• Strong regulatory frameworks are necessary to encourage
the flow of private sector financing and the establishment
of primary insurance markets. Development finance
institutions (DFIs) could play a significant role in
providing access to finance and in removing barriers to
private investment by pioneering approaches that can
bridge gaps and incentivize private investment.
• Greater clarity is needed as to how L&D will be financed in
the context of climate funds. There are currently 26 climate
funds, six of which are dedicated to adaptation, but none
on L&D. Greater guidance on climate finance, including
L&D financing at the Twenty-second Conference of
the Parties (COP) later this year, would help greatly in
moving the discussion forward. The Warsaw International
Mechanism (WIM) could provide leadership in helping to
determine whether a separate fund for L&D is necessary.


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Also Published In

Centre for International Governance Innovation

More About This Work

Academic Units
International Research Institute for Climate and Society
Published Here
March 13, 2024

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