This paper points to a lack of access to innovative insurance instruments - such as parametric risk insurance, which is specifically designed to pay out quickly in the aftermath of a natural disaster. This type of insurance gives countries a rapid injection of capital that can be vital in the early window before overseas assistance is effectively ramped up and delivered. In order to make innovative insurance and climate risk-management tools available, a critical gap in high-resolution data and cutting-edge modelling needs to be bridged.
The authors propose the following recommendations to the G7 (p. 4):
- The G7 can and should play an important role in helping ensure that it meets its goal of expanding climate-related risk insurance in developing countries.
- The G7 should advance a public-private partnership between G7 nations, international insurers, and financial institutions to expand modelling capacity and eliminate the risk modelling gap.
- The G7 also can provide additional financial and technical resources to provide expertise on weather patterns and projections and modelling design, important prerequisites for climate-related risk insurance expansion.