COP 23 puts Bank-backed climate insurance in spotlight

6 December 2017

November’s UN Framework Convention on Climate Change (UNFCCC) Conference of Parties (COP) 23 in Bonn ended without agreement on financing Loss and Damage (L&D) for developing countries already experiencing the impacts of climate change. In the absence of clarity on the issue, the role of climate insurance – an instrument widely promoted by the World Bank – in mitigating L&D is increasingly emerging as the default option, despite the fact that it is unable to address many climate-change related impacts (see Observer Autumn 2017).

Two new initiatives were launched at COP 23 with a heavy climate insurance focus: The G20-backed InsuResilience Global Partnership – which will rely on the Bank’s technical assistance, and will seek to provide ‘access’ to climate insurance for 400 million people in developing counties by 2020 – and the UNFCCC Clearing House on Global Risk – which highlights existing Bank, and other, climate insurance initiatives for potential developing country clients. Harjeet Singh of ActionAid International responded in a statement: “Insurance might turn out to be a piece of the puzzle, but we can’t pretend that it’s a safety net for everyone. Insurance does sometimes help people who are impacted by floods or cyclones. But it won’t be an option for those facing certain losses.”

Questions also remain about who will fund premium financing for climate insurance schemes, which range from state-level ‘sovereign’ policies, to micro-insurance for farmers and property owners in developing countries. As summed up by Singh: “Will poor people in vulnerable countries, who have done nothing to cause the climate crisis and who bear the brunt of its impact, need to pay for climate insurance?”