Climate Risk Insurance: Transparency, Participation, Accountability

Sovereign risk pools constitute one mechanism to protect countries and their populations against the immediate impacts of disasters. In recent years, regional risk pools such as the Caribbean Catastrophe Risk Insurance Facility (CCRIF) have drawn increasing attention and interest, leading to the creation of the African Risk Capacity (ARC) in 2012, and the launch of the pilot insurance programme of the Pacific Catastrophe Risk Assessment and Financing Facility (PCRAFI) in 2013.

Until today, the three pools together have disbursed around 40 payouts to their member states and thereby helped deliver timely relief to affected states and individuals. CCRIF’s payouts, for example, have been used to maintain the payment of government salaries after disaster and to repair critical infrastructure, including bridges and roads. PCRAFI payouts on the other hand have helped to dispatch medical personnel to impacted areas and to transport emergency goods across the sea, while the funds disbursed by ARC supported the distribution of food and fodder as well as conditional cash transfers. As the respective pools‘ policy renewal rates show, these benefits are valued by many of their members, who continue to use climate risk insurance as part of their climate and disaster risk financing strategies. The support of regional risk pools as a risk financing solution is further substantiated when looking at Southeast Asia, where a fourth pool, the Southeast Asia Disaster Risk Insurance Facility (SEADRIF) is currently under development.

In light of these developments, questions around the transparency and accountability of these risk pools as well as the ability of civil society to engage constructively with them attract increasing attention. This paper discusses the importance of these themes in the context of sovereign climate risk insurance as well as highlights their positive influence on ensuring that the pools benefit those most vulnerable to climate impacts, building public support and improving institutional effectiveness.

This paper focuses on the three risk pools CCRIF, PCRAFI and ARC, and aims to improve understanding of how the requirements of transparency, participation and accountability apply to them by developing corresponding assessment criteria against which the pools are then evaluated. In doing so, the author builds on desk-based research as well as a number of semi-structured interviews with individuals involved in work on and around those risk pools. It finds that – for all of the three pools – gaps remain, but also demonstrates they have made or are making valuable efforts to increase their transparency, accountability and engagement with civil society. In concluding, the paper outlines a set of recommendations for several stakeholders on how to further improve on ‘good governance‘, encompassing civil society organisations, policy holders (governments), donor countries, the World Bank, and the regional risk pools themselves.

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