Insurance & Risk Transfer

This paper examines the contribution of the insurance sector to climate adaptation. It outlines some of the challenges to assessing future climate risks, encouraging policyholder risk reduction and supporting resilient reinstatement.
Organisation for Economic Co-operation and Development

Risk transfer

Risk transfer

The process of formally or informally shifting the financial consequences of particular risks from one party to another, whereby a household, community, enterprise or State authority will obtain resources from the other party after a disaster occurs, in exchange for ongoing or compensatory social or financial benefits provided to that other party.

Annotation: Insurance is a well-known form of risk transfer, where coverage of a risk is obtained from an insurer in exchange for ongoing premiums paid to the insurer. Risk transfer can occur informally within family and community networks where there are reciprocal expectations of mutual aid by means of gifts or credit, as well as formally, wherein governments, insurers, multilateral banks and other large risk-bearing entities establish mechanisms to help cope with losses in major events. Such mechanisms include insurance and reinsurance contracts, catastrophe bonds, contingent credit facilities and reserve funds, where the costs are covered by premiums, investor contributions, interest rates and past savings, respectively.

Author Name
Sarah Landelle
Insurers in Germany have warned that new homes continue to be built in flood-risk areas in the country. In the last 23 years, over 32,000 residential buildings have been constructed in high-risk areas.
The Geneva Papers: Special issue on climate risks and insurance
The first 2022 issue of The Geneva Papers on Risk and Insurance examines the role insurance can play in managing physical climate risks associated with extreme weather events.
International Association for the Study of Insurance Economics
In this brief, the World Food Programme (WFP) is introducing its flagship integrated climate-risk management approach, the R4 Rural Resilience Initiative (R4), to address both the climatic and non-climatic drivers of vulnerability in Haiti.
World Food Programme
Drought in Somalia
WFP has received US$15.4 million worth of insurance payouts from African Risk Capacity (ARC) Limited that will provide a cash transfer to affected people from March to May 2023, enabling them to recover from the impacts of drought.
World Food Programme
This paper looks at the capability of rural housing disaster insurance to foster local residents’ disaster resilience in central and western Tibet.
International Journal of Disaster Risk Science
Three Indian female textile workers standing together in solidarity at factory
Marking SEWA’s 50th anniversary, Arsht-Rock announces co-creation of the new Extreme Heat Income Insurance, a climate resilience tool to replace income lost to climate-driven extreme heat for women in the informal sector
Adrienne Arsht-Rockefeller Foundation Resilience Center
From building waterways to crop insurance, Pakistan urged to implement a holistic climate resilience plan to stem future disasters. Donors pledge $9 billion for Pakistan flood rebuilding. Recovery plan targets climate resilience and adaptation.
New research tests the promise of insurance to harden the U.S. economy to tropical storms.
Eos - AGU