In the first six months of 2019 alone, seven million people were displaced by Cyclone Idai in southeast Africa, Cyclone Fani in south Asia, Hurricane Dorian in the Caribbean, and flooding in Iran, the Philippines and Ethiopia. German reinsurer Munich Re estimated total losses from climate and weather events in 2017 were US$320 billion, the largest amount ever recorded. Globally, only half the US$160 billion losses from ‘natural’ catastrophes in 2018 were insured.
Both developed and developing economies are in the firing line. Perhaps surprisingly, the Germanwatch Global Climate Risk Index reports that Japan, the Philippines, and Germany were at the top of the list of the most affected countries in 2018. Despite this, climate-related disasters tend to hurt the poor and vulnerable the most - of the ten most affected countries 1999-2018, seven were in the low- or lower-middle income group. That’s bad news for the world’s poorest populations - especially for women, who are disproportionately affected by the impacts of climate change.
According to the InsuResilience Global Partnership, this is due to their levels of economic participation, role in agriculture, unpaid care responsibilities, and access to information. Many women in developing countries struggle to own land, meaning they face barriers to insurance, and lack of documentation and written proof of land tenancy excludes some women farmers from insurance cover. Furthermore, women’s vulnerability to climate change has implications for their risk profile, protection needs and preferences, and barriers to access and use of climate risk insurance.
Fairtrade International found that, 60-80 percent of the world’s food is grown by women, and women’s role in farming is growing year on year. Women smallholder farmers in developing countries could be major beneficiaries of the new wave of agricultural insurance products - many of them designed to manage climate risk - now coming onto the market.
Inclusive climate risk insurance is vital for building resilience. It can also play a crucial role in national risk reduction strategies - of course, it’s not the only disaster risk management tool, but it is an important one which does not always get the recognition it deserves.
Agricultural insurance comes in many forms, including area-yield index insurance, crop weather index insurance (or parametric insurance), and more recently, revenue index insurance which protects farmers against price shocks in volatile years. Satellite imaging, automated weather data, smartphones and blockchain technology are constantly improving the efficiency of loss verification. A new climate insurance programme funded by the UK Department for International Development (DfID) and by the InsuResilience Investment Fund aims to reach more than 690,000 families in Kenya, Malawi, Mali, Zambia, Cambodia and Myanmar.
The story of Zemada Kebeb, a smallholder farmer in the drought-prone Tigray region of Ethiopia, demonstrates the benefits of climate risk insurance for women. Recurring droughts left her and her family suffering from food insecurity and chronic hunger, and she was in debt from loans she had taken out for seeds and fertiliser. However, after Zemada joined the World Food Programme’s R4 Rural Resilience Initiative, she received a drought-related insurance payout which not only covered her loan repayment, but also enabled her to buy two more sheep which now produce milk for her and her children.
“The financial sector is recognising increasingly that the client profile of women is different from men, due to their gender-diverse life cycle needs and associated risks, resulting from cultural norms, socio-economic patterns and biological differences,” wrote Natascha Beinker, who chaired the Global Partnership for Financial Inclusion (GPFI) during Germany’s G20 Presidency in 2017. “Addressing these needs of women’s client segments present a market opportunity for insurers and intermediaries.”
Women represent an untapped target group for insurance with high growth potential, and there is a strong social and business case for factoring gender into the design and implementation of inclusive insurance. As a report from the Cass Business School points out, women and men often control different crops and livestock or even have different financial capabilities and vulnerability related to the same risks, so making insurance products more gender-sensitive in their design has been shown in pilot studies to alleviate some of those issues.
If the business case for gender-sensitive climate risk insurance is strong, its contribution to the Sustainable Development Goals (SDGs) is even more compelling. According to a joint report from GIZ, IFC and WWB, “Inclusive insurance for women can contribute to sustainable economic development. Inclusive insurance is recognised as a valuable means to stabilise and even improve income for individuals, households, and businesses… It builds financial resilience, cushioning individuals, households, businesses, and communities from economic shocks, preventing them from falling into poverty or becoming poorer.”
In many developing countries, credit is often the main access to insurance, yet because women are less able to access credit, they are also less likely to have insurance. The social and economic benefits of insurance designed and developed to meet the needs of women in emerging economies are clear, but despite this, gender-sensitive climate risk insurance - designed by women for women - remains the exception.