Index insurance and climate risk: prospects for development and disaster management
This publication examines the use of index insurance to help reduce vulnerability and poverty and adapt to climate change. Experience in index insurance to-date has been limited to individual case studies, which show promise of lessening the impacts of climate shocks, and enabling investment and growth in the agriculture sector. However, these cases have also uncovered significant questions that must be answered in order to start implementing index insurance at a scale relevant to attaining meaningful development impacts. The publication looks at the technical and operational challenges that currently limit the growth and spread of index insurance. It highlights a number of case studies of the various applications of index insurance across the world thus far, including: a public-private partnership program in Brazil to support farmers; a multinational scheme in the Caribbean for earthquake and hurricane risk; a national programme in Ethiopia to complement a drought early warning system; a programme to enable access to credit for smallholder farming communities in Malawi; and public and private programmes in India that offer contracts across many states, for many crops, covering a range of risks, from excessive rainfall to extreme temperatures.