Insurance for climate adaptation: Opportunities and limitations

Insurance can be a key tool in reducing vulnerability and promoting resilience. Countries with high insurance coverage recover faster from disasters, and increasingly, governments are recognizing the role and benefits of insurance in transferring risk from disasters. Yet there is a large and even widening ‘protection gap’ of underinsurance. Insurance also contributes to the wider understanding of climate-change risks, and helps promote measures that individuals and communities can use to improve their protection from climate-change-driven disasters. For example, insurance expertise in risk evaluation helps to make the economic case for flood defences, or for changes to how and where buildings are constructed.