Insuring climate risk

In episode 15, we discuss how insurance can increase resilience to climate risk. Our two guests and their respective organizations cooperate to provide climate risk insurance for developing countries. Dr. Helke Waelde is a senior sector economist at the KfW Development Bank, and Dr. Daniela Zimmermann is senior manager for regulatory affairs at the reinsurance company Hannover Re.

In cooperation on climate risk solutions such as the Natural Disaster Fund (NDF), insurance policies are provided which lead to a quick payout to beneficiaries in developing countries in case of an extreme weather event. So-called parametric insurance solutions are geared towards providing quick liquidity when a pre-determined extreme weather event occurs. They thereby put the policyholders, for example governments of developing countries, in a position to provide quick relief to affected populations.

KfW Development Bank and Hannover Re also work jointly on policy briefs to inform discussions around the financial contributions of the Global North to address climate risk in developing countries.

• KfW Development Bank and Hannover Re work together to develop and offer solutions that insure developing countries against climate risk. This form of insurance is supported through funds from the Federal Ministry for Economic Cooperation and Development . One of the objectives for KfW Development Bank is for example to increase the sustainability and resilience of the infrastructure financed through German development cooperation.
• Parametric insurance is a form of insurance where a payment is automatically made when a pre-defined trigger is met, such as a certain wind speed or a given amount of precipitation. This secures a quick payout, which helps governments to support affected vulnerable populations quickly.
• Climate change attribution is the study of the extent to which human influence has contributed to extreme climate or weather events. KfW Development Bank  and Hannover Re have co-authored a policy brief on this to encourage a more fact-based discussion on the responsibility of the Global North in helping developing countries face climate risk.

• Natural Disaster Fund (NDF) Impact Report 2023
• Joint development research brief by KfW and Hannover Re on the responsibility of the Global North regarding climate risk in developing countries (attribution theory)
• The Insurance Development Forum
• The Global Shield against Climate Risks
• The Fund for Responding to Loss and Damage

Financing Impact is a podcast about funding and scaling societal impact. This podcast is brought to you by SciFi, the Societal Impact Financing Initiative at ESMT Berlin. SciFi is supported by the Gates Foundation, among others.

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