Can insurance help the survivors of extreme weather events overcome trauma?

Thursday, September 19, 2019

As the Bahamas continue to reel in the wake of Hurricane Dorian, the focus is naturally on helping the survivors meet their immediate needs of food, water and shelter. Early estimates put the damage at about US$7 billion excluding infrastructure and vehicles - with up to 60% uninsured.

But the physical and mental health impacts of Dorian and other disasters remain long after houses have been rebuilt and roads repaired. Extreme weather events such as tropical storms, floods, sea level surges, droughts and forest fires - which scientists agree are made more frequent and more intense by climate change - have long-lasting effects on people’s lives. Yet insurance and risk management has tended to focus on infrastructure resilience and rebuilding, whilst failing to address long-term trauma, and in particular mental health impacts. According to one recent study, as many as half of the people who survive extreme weather events experience negative mental health outcomes.

To begin to address this gap, the MiN is hosting a session at the 15th International Conference on Inclusive Insurance (15th IMC) on Post disaster recovery - what is the role of insurance?, looking at the needs of survivors, including coping with trauma, and how inclusive insurance can help victims access health and counselling services. As the conference programme notes, “In the wake of catastrophic events, insurance payouts can make a significant difference to survivors in accessing the material and psychosocial resources needed to rebuild their lives and get back on their feet.”

There are, unfortunately, plenty of recent disasters to learn from. In November 2013, The Philippines were hit by Typhoon Haiyan, a Super Typhoon with the highest wind speeds ever seen on land. Around 7,000 people died, 24,000 were injured and more than 4.1 million were displaced. Despite the country being a ‘success story’ in terms of microinsurance - at the time, it had the highest insurance penetration in Asia and Oceania - one estimate put the economic losses at US$6.5-14.5 billion, with only US$300-700 million of that insured. But the lasting impacts on mental health are harder to quantify. Mental health problems were more frequently reported than physical injuries, including conditions such as stress-related reactions, post-traumatic stress disorder (PTSD), and depression or anxiety.

Four months after Haiyan struck, 40% of microinsurance claims still had not been paid, but despite this, microinsurance did make a difference in the recovery from the typhoon. Funds were spent restarting livelihoods and repairing homes. Microinsurance filled the gap especially in cases where assistance wasn’t provided by the Government, NGOs or international organisations to repair homes.

Part of the challenge for insurance providers is that mental health trauma in the wake of a disaster can be hard to define and even harder to see. One recent study suggests that the long term psychological, social and financial impacts borne by individuals and communities are unquantified and invisible, because of a lack of data beyond the costs of immediate insurance claims. PTSD can disrupt the lives of sufferers for years until they recognise the symptoms and seek help. Barriers to seeking counselling include lack of access or knowledge about mental health resources and a lack of insurance to pay mental health providers.

It’s not all bad news. Researchers from the University of Cambridge found that after Haiyan, households covered by life insurance delivered by a mutual microinsurer recovered better after the disaster than those without. Among their recommendations were that commercial insurers must deliver better for low-income populations, working with communities and regulators to understand and shape individual country needs.

Insurance against climate change impacts is already well established. Providers - including members of the MiN are already covering farmers against crop and livestock losses, as well as property damage from floods and storms. But insurance against mental health trauma is clearly lacking, and by bringing together insurers, regulators, distributors and policy-makers, the MiN aims to find some solutions to these pressing needs. Please do join Network Executive Director Katharine Pulvermacher, who will moderate a discussion on this important issue with Farzanah Chowdhury, Managing Director & CEO of Green Delta Insurance in Bangladesh, Denis Garand, President of Denis Garand and Associates, and Isabelle Delpeche, Micro Insurance Director at the Alternative Insurance Company (AIC) in Haiti on day three of the 15th IMC in Dakar, Bangladesh.

Photo credit: IHH Humanitarian Relief Foundation