LONDON, 4 May 2016: Donors will fail to realise the potential of climate risk insurance to reduce poverty for hundreds of millions of people unless they take a principled approach towards investing long-term funding that benefits the poorest and most vulnerable.
According to RESULTS UK’s new policy report ‘Weathering a Risky Climate’ published today ahead of the World Humanitarian Summit, there now exists an unprecedented opportunity for donors to support a mass expansion of climate insurance across developing countries. Last year, the G7 ambitiously pledged to reach an additional 400 million vulnerable people with climate risk insurance by 2020 through its ‘InsuResilience’ Initiative. But this will be impossible unless donors significantly step up their level of commitment and follow the ‘Pro-Poor Principles for Climate Risk Insurance’ set out in the report.
Extreme weather events such as heatwaves, droughts, storms and floods were twice as common over the past decade as they were during the period 1985-94. Climate scientists predict that this trend will continue, jeopardising decades of hard-won progress in the fight against extreme poverty. Smallholder farmers, pastoralists, and others whose livelihoods depend on predictable weather patterns are most vulnerable.
At the World Humanitarian Summit taking place in Istanbul on 23-24 May, the international community will commit to invest in smart risk financing mechanisms that proactively build resilience before disasters strike, rather than reacting afterwards at staggering human and economic cost. Insurance can be one important tool by which to achieve this. Every £1 invested in insurance can save £4 in averted international humanitarian assistance. By providing rapid payments when extreme weather events and disasters occur, insurance can protect families from entering a downward spiral into poverty. In one weather-based insurance programme in Kenya, insured households were 36% less likely to distress-sell their livestock and 25% less likely to reduce meals as a coping strategy.
Political momentum on climate risk insurance is growing – through the G7 ‘InsuResilience’ Initiative, at the Paris Climate Conference in December 2015, and now in the upcoming World Humanitarian Summit. But without urgent efforts by donors to scale up programmes and ensure their impact in reducing poverty, we will miss the chance to equip ourselves with a transformational tool to manage dangerous climate risks.
Catherine Blampied, the report’s author, said: “The people on the frontlines of the climate crisis are those who did nothing to cause it: the world’s poorest communities. One failed rain and one lost crop can wipe out years of hard work and trigger a vicious cycle of poverty. We are calling on donors not only to commit more funding for climate risk insurance, but also to set a new gold standard for their investments by adopting the Pro-Poor Principles for Climate Risk Insurance.”
Aaron Oxley, Executive Director of RESULTS UK, said: “The G7’s goals are laudable. In order to achieve them, donors will need to think beyond just building markets. We know that insurance products at commercial prices will always be out of reach for the poorest people. By committing to target the most marginalised and vulnerable people, including through financial support to pay their premiums, donors can ensure that climate risk insurance programmes leave no-one behind.”
For further information, please contact Tom Maguire, Communications Manager on firstname.lastname@example.org or 020 7793 3970
RESULTS UK is a movement of passionate, committed, everyday people who together use their voices to influence political decisions that will bring an end to poverty. For more information please visit www.results.org.uk