Harnessing insurance as a climate resilience tool

As the recently concluded 28th Conference of the Parties to the UN Framework Convention on Climate Change unfolded in Dubai, the global community continued to grapple with the urgency of addressing climate change.

The impact of climate change is increasingly visible, with extreme weather events such as floods becoming more frequent and severe.

In Kenya, where climate change effects are acutely felt, a critical aspect of climate resilience emerges-the role of insurance in mitigating the aftermath of climate-induced disasters. Kenya, like many African nations, bears the brunt of climate change, with increased occurrences of floods wreaking havoc on communities, agriculture, and infrastructure. Last July was the second hottest month on record globally, with scientists marking 2023 as the hottest on record, which ushered in the eventual return of the El Nino weather phenomenon.

As the world discussed themes such as Technology and innovation, inclusion, frontline communities, and finance at the conference, it was imperative to highlight the vital role that insurance can play in building climate resilience.

Insurance is traditionally perceived as a financial safety net for unforeseen events. In the context of climate change, it becomes a powerful tool for risk mitigation and adaptation.

To demonstrate the effects of climate change, the recent occurrence of floods, which are becoming more prevalent in Kenya have resulted in substantial economic losses, displacements, loss of life and disruptions to livelihoods.

Taking action to prevent the adverse effects of climate change is critical, especially in developing economies which face difficulty responding and recovering from the aftermath.

The discussions at the conference underscored the importance of technology and innovation. In the realm of insurance, technological advancements are revolutionising the way risks are assessed, policies are designed, and claims are processed.

Satellite imagery, data analytics, and artificial intelligence can contribute to more accurate risk modelling, enabling underwriters such as CIC Group to provide coverage that is not only comprehensive but also affordable.

Inclusion is another key theme at the conference, emphasising the importance of considering the needs of vulnerable populations. Communities at the frontline of climate change are often the most affected and the conference underscores the importance of empowering these communities to proactively manage and mitigate climate risks.

Micro-insurance products emerge as a tool for inclusive development, ensuring that even the most vulnerable have access to affordable coverage while empowering these communities to recover in the aftermath of climate-induced disasters.

As the conference delved into financial solutions for climate resilience, insurance also stands out as a critical component.

Governments, businesses, and individuals must pool resources through insurance mechanisms to create a financial safety net that is robust in the face of climate-related risks ensuring that the financial burden of recovery is distributed more equitably.

The role of insurance cannot be overstated. In Kenya, where unpredictable weather patterns are an ever-present threat, insurance emerges as a crucial tool for mitigating the impact of climate-induced disasters both in the short and long term.

By leveraging technology, promoting inclusivity, and integrating financial mechanisms, insurance can contribute significantly to building resilience and fostering sustainable development in the face of a changing climate.

The decisions made at the conference will shape the global response to climate change, and integrating insurance into these strategies will be key to creating a more resilient and sustainable future for all.