Sovereign climate and disaster risk pooling
The G7 InsuResilience Initiative, sponsored by the German presidency of the G7 with the goal of expanding climate risk insurance coverage to an additional 400 million poor and vulnerable people in developing countries by 2020, has already taken significant steps toward expanding existing disaster and climate risk insurance programs and creating new ones. To date, 26 countries in Africa, the Pacific, and the Caribbean and Central America have purchased sovereign catastrophe risk coverage. However, climate and disaster risk insurance coverage for vulnerable people in developing countries is far from comprehensive, and indeed remains low. A key question for G20 consideration is how to strengthen cooperation between G20 countries and developing countries to build solutions that integrate disaster and climate risk into broader financial protection strategies for vulnerable people, and how to set expectations about the role of catastrophe risk pools as a meaningful, cost-effective instrument to that end.
Risk pools can play an important role in moving the management of disaster and climate shocks away from uncertain, ad hoc humanitarian assistance and making it part of planned development. The challenge for the international community is to provide the right set of incentives. Both international partners and potential recipient governments have a responsibility to plan and program financing in advance.
This report focuses on sovereign climate and disaster risk pools as a mechanism to enhance financial instruments available to national and subnational governments.