Heat insurance offers climate change lifeline to poor workers
- Insurance schemes launched for heat, cyclones, drought
- Value of parametric insurance seen at $29.3 bln by 2031
- Many have paid out as climate impacts worsen
- Investment in adaptation seen as key for instruments' future
A bright sun beat down on the sprawling Indian market where Kamlaben Ashokbhai Patni sat worrying about the brass jewellery on display in her wooden stall.
Such high temperatures could mean a hit to business. But Patni is now among 21,000 self-employed women in Gujarat state enrolled in one of the world's first insurance schemes for extreme heat, launched this month by nonprofit Arsht-Rock Foundation Resilience Center in partnership with microinsurance startup Blue Marble and a trade union.
While parametric insurance has been around since the 1990s, recent advances in satellite technologies have opened up areas that were previously difficult to assess for damage, such as distant islands or mountain communities.
However, some industry experts question whether the products will be financially viable in the long-run, in part because of too-frequent payouts due to climate risks escalating faster than predicted less than a decade ago. This could drive up premiums.
One way of avoiding constant payouts, industry analysts say, is for governments to implement better strategies to defend against weather extremes, for example by planting crops more resilient to drought or building cooler homes to protect against rising heat, thus slashing losses. This could allow insurers to set triggers higher.