The opportunity to earn a decent living is essential so that people can lift themselves out of poverty and build a sustainable future for their families. Without adequate financial resources, other rights, such as access to health, nutrition and education, are often out of reach too. At the same time, without proper healthcare, nutrition and education, people are often unable to make the most of their potential and work productively. It is typically the poorest and most vulnerable who are most likely to be locked out on both sides of this equation.
Access to financial services
Financial services such as credit, savings, insurance and digital payments (such as for remittances or government social transfers) can make a huge difference to people on low and erratic incomes. It is increasingly well-understood that journeys out of poverty are often undermined by sequences of economic setbacks. Even a relatively small amount of savings or access to microinsurance can help see families through tough times, without resorting to coping strategies that could have irreversible effects, like selling assets.
The growing threat of climate change
The devastating impacts of climate change – including increasingly severe and frequent droughts, heatwaves, storms and floods – are already taking a disproportionate toll on the very people least responsible for causing them: the world’s poorest and most vulnerable communities. Around two-thirds of the extreme poor work in agriculture. Smallholder farming supports the livelihoods of two billion people, but it is an inherently risky business, with entire families’ futures resting precariously on a multitude of factors coming together in exactly the right way in just one or two growing seasons each year. Climate change is making this much more difficult and unpredictable.
Climate risk insurance
Expanding climate risk insurance coverage is one important, emerging tool to build resilience to climate shocks among the poorest and most vulnerable communities. It can be implemented at both the micro level for individual farmers and the macro level where countries themselves buy insurance for millions. For example, a microinsurance payout could allow a farmer to replant the next season or pay off a small loan they had taken out to invest in seeds or fertilisers, preventing them from falling into a spiral of debt. In the case of macro-level insurance, the insurance payout is made to governments or sometimes other institutions such as humanitarian agencies working in developing countries. This allows them to provide rapid assistance to affected groups and implement contingency plans without cutting into their regular budgets, or waiting for emergency appeals that arrive too late.
Current insurance coverage is extremely low across developing countries. Innovative insurance schemes accessible to the poorest people will be a vital tool to build their resilience to climate change.
We’re working to….
- Political Will: We’re working to raise awareness and support among UK policymakers and parliamentarians for innovative risk insurance programmes that protect the poorest and most vulnerable from growing climate shocks and help build more resilient livelihoods.
- Policy Change: We’re working to make sure that the UK Governments climate risk insurance programmes are targeted (specifically focused on the poorest and most vulnerable people), smart (based on evidence about how donor interventions can add the most value) and coherent (better coordinated across government).
- Resource Mobilisation: We’re working to ensure that the UK builds on the promises it made by joining the G7 'InsuResilience' Initiative and invests increased resources into climate risk insurance programmes, including a significant expansion of funding to scale up access to microinsurance for vulnerable groups such as smallholder farmers.