When developing countries are hit by massive disasters including earthquakes, monsoon floods, hurricanes and many others, the economic impacts are often overwhelming. During the COP16 meeting in Cancun, countries were asked to submit their views on developing a ‘climate and disaster risk insurance facility.’ This insurance facility could potentially aid countries that are most affected by extreme weather events caused by climate change. There is one example used by Caribbean countries – The Caribbean Climate Risk Insurance Facility (CCRIF) — the first multi-country risk pool in the world. Basically, donors including the EU, Canada, UK, France and the World Bank set aside money for the facility and each Caribbean country part of the scheme pays an annual premium of $200,000 USD to $3 million USD based on the extent of their insurance cover. By pooling the ‘risks’ of its members together, the CCRIF can provide insurance coverage at low premiums.
There is no doubt that countries in the Global South could benefit from insurance to aid them in recovering from future disasters. Perhaps a non-profit insurance scheme could make better use of donors’ resources by helping developing nations prepare for disasters before they occur. But the most important aspect of having insurance of this kind has to do with managing disasters locally. The fact that developing countries could have financial resources available soon after large-scale disasters happen, could likely save many lives and help restore infrastructure much more quickly and effectively depending on how the money is used.
CLIMATE CHANGE: Disaster insurance the Caribbean way. http://www.irinnews.org/report.aspx?ReportId=91385. IRIN