The purpose of this paper is to explore the potential role of Index-based Disaster Insurance as a tool for climate change adaptation and social protection in developing countries. The paper will first provide an overview of recently piloted micro policies and macro policies. It will then outline several limitations of the micro approach as a tool for social protection, and move on to discuss the macro approach and its potential as a more sustainable instrument for humanitarian intervention. Using Ethiopia as a case study, it will be argued that the current appeal-based emergency model is unsustainable. The paper will then discuss the possible value of two key factors, “timeliness” and “reliability”, that disaster insurance could bring to humanitarian intervention. The discussion will lead to the conclusion that rigorous and extensive research is necessary to assess the financial sustainability and feasibility of this approach as a viable tool for disaster risk reduction and climate change adaptation. Key challenges considered are the complexity of a sensible cost-benefit analysis as well as the issue of targeting and participation. Finally, specific recommendations will be provided for donors, governments and civil society.
Christian Aid, Climate and Disaster Governance