Quick emergency relief and swift recovery. After a disaster, valuable time passes while the international community and aid organisations often have to work hard to raise money. It is not uncommon for weeks or even months to pass before the survivors receive assistance. More and more governments and humanitarian organisations are realising that climate risk insurance facilitates quick and effective action. Such insurance protects human lives, livelihoods, but also the national budget, from the impacts of climate change.
Risk financing on the basis of climate risk insurance is based on a preparedness approach. This makes it possible in an emergency to pay out money to survivors a short time after, or even before, they have incurred a loss. This saves people's lives and assets and protects development gains that had already been made. In other words, insurance schemes help to reduce poverty, secure debt sustainability, attain sustainable development and also reduce the economic push factors of migration.
Entitlement to compensation for losses. Climate risk insurance gives insurance holders the certainty that, if the predefined events occur, they will really receive assistance after a disaster, enabling them to become less dependent on assistance and making their own contributions towards securing their livelihoods. In the case of index-based drought insurance, for example, the disbursement of benefits is contingent on precipitation levels remaining below a specified limit.
