Global weather insurance pool mooted for
developing
countries
Developed countries should set up a global insurance mechanism for developing nations to provide cover against extreme weather events such as drought and floods, according to an international non-profit alliance set up to develop insurance-related solutions to help manage the impact of climate change.
The insurance pool, which is proposed by the Munich Climate Insurance Initiative (MCII), would require developed nations to contribute about US$3-5 billion a year. MCII members include insurers, climate change and adaptation experts, non-governmental organisations and researchers.
On their part, beneficiary countries need to develop appropriate policy frameworks so as to ensure that communities benefit from their climate change insurance schemes. These countries also need to show progress on a full risk management programme.
The insurance pool would provide developing nations with quicker payouts in the event of disasters than current international aid arrangements, and would also be subject to less corruption. The MCII says that under the proposal, the moral hazard of disaster aid could be replaced by index-based insurance systems that have little moral hazard.
Other recommendations in the proposal include providing support to governments of developing nations for sovereign risk-transfer initiatives like microinsurance. |
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