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Financing the Resilience Insurance Gap

This blog series focuses on #sustainablefinance for #coastlines and #islands #SIDS that face existential threats from #climatechange. At #oceanassets1, we are developing solutions to engage #responsibleinvestors, #blendedfinance and #climateinsurance in this challenge.

Coastal and island nations are on the front lines of climate change. The combination of climate events with urbanisation makes these areas - where 60% of the world's population lives - even more vulnerable. The insurance industry is starting to be part of the solution. Of the three areas in the global $1.2TR insurance gap - natural catastrophes, mortality and healthcare - the first is accelerating the fastest.

The solutions require a combination of climate finance, insurance, regulation, government incentives, risk modelling, better engineering and urban development. From the insurance side, the challenge is how to transfer risk from those on the front lines to the capital markets. This requires new investment products based on innovative risk models like parametric insurance and resilience bonds.

For coastal and island nations, ports are the gateways to development. They are also highly vulnerable to rising seas and storm surges. At Ocean Assets Institute, we are designing an infrastructure finance platform to improve the climate resilience of ports in developing Asian nations. We expect to integrate insurance with financial tools, including social and environmental impact measurement.

The challenges are many. But if the insurance industry continues to make climate a major focus, it will contribute meaningful solutions that are urgently needed.

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