Investigating the Impact of Climate Change on the Robustness of Index-Based Microinsurance in Malawi

This analysis explores the potential impact of climate change on the viability of the Malawi weather insurance program making use of scenarios of climate change-induced variations in rainfall patterns. The analysis is important from a methodological and policy perspective. By combining catastrophe insurance modeling with climate modeling, the methodology demonstrates the feasibility, albeit with large uncertainties, of estimating the effects of climate change on the near and long-term future of microinsurance schemes serving the poor. By providing a model-based estimate of the incremental role of climate change, along with the associated uncertainties, this methodology can quantitatively demonstrate the need for financial assistance to protect micro-insurance pools against climate-change induced insolvency. This is of major concern to donors, nongovernmental organizations, and others supporting these innovative systems; those actually at-risk; and insurers. A quantitative estimate of the additional burden that climate change imposes on weather insurance for poor regions is of interest to organizations funding adaptation.

Bibliographic Details

Main Authors:	Hochrainer, S., Mechler, R., Pflug, G., Lotsch, A.
Language:	English
Published:	World Bank, Washington, DC 2008-05
Subjects:	ACCOUNTING, ACTUARIAL CALCULATIONS, AGRICULTURAL PRODUCTION, ANNUAL INTEREST RATE, BANKRUPTCY, BANKS, BIOSPHERE, BORROWER, CAPITAL REQUIREMENTS, CARBON CYCLE, CATASTROPHE BONDS, CATASTROPHIC EVENTS, CATASTROPHIC LOSSES, CLAIM PAYMENT, CLAIM PAYMENTS, CLIMATE, CLIMATE CHANGE, CLIMATE CHANGE ADAPTATION, CLIMATE CHANGE RISKS, CLIMATE CONDITIONS, CLIMATE IMPACTS, CLIMATE MODELS, CLIMATE SYSTEM, CLIMATIC CHANGE, CLIMATOLOGY, CONTRIBUTION, COUNTRY RISK, CROP INSURANCE, CRYOSPHERE, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ORGANIZATIONS, DISASTER AID, DISASTER INSURANCE, DISASTER INSURANCE SCHEMES, DISASTER RELIEF, DISASTER RISKS, DISASTERS, DROUGHT, DROUGHT MANAGEMENT, DROUGHTS, EL NINO, EMISSIONS, EXOTIC OPTIONS, EXTREME EVENT, EXTREME EVENTS, EXTREME WEATHER, FARMER, FARMERS, FINANCIAL ANALYSIS, FINANCIAL ASSISTANCE, FINANCIAL INSTRUMENTS, FINANCIAL SERVICES, FINANCIAL SUPPORT, FRAMEWORK CONVENTION ON CLIMATE CHANGE, GCM, GREENHOUSE GAS, GREENHOUSE GAS CONCENTRATIONS, GREENHOUSE GAS EMISSIONS, HEAT WAVES, HOLDING, HYDROLOGICAL CYCLE, INFLATION, INFLATION RATE, INITIAL CAPITAL, INSURANCE COMPANY, INSURANCE CONTRACT, INSURANCE CONTRACTS, INSURANCE INDUSTRY, INSURANCE PREMIUM, INSURANCE PREMIUMS, INSURANCE PRODUCT, INSURANCE SCHEME, INSURER, INSURERS, INTEREST RATE, INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INTERNATIONAL ENVIRONMENTAL LAW, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL LAW, INTERPOLATION, INVESTING, INVESTMENT MANAGEMENT, IPCC, KYOTO PROTOCOL, LACK OF INFORMATION, LOAN AGREEMENT, LOAN DEFAULT, LOAN SIZE, LOW-INCOME, MATHEMATICS, MICRO-INSURANCE, MICROINSURANCE, NATURAL DISASTER, NEGOTIATIONS, NONGOVERNMENTAL ORGANIZATIONS, OUTSTANDING LOAN, PORTFOLIO, POTENTIAL IMPACTS, PRECIPITATION, PROBABILITIES, PROBABILITY, PROGRAMS, RAINFALL, REINSURANCE, REINSURER, RISK ASSESSMENT, RISK MANAGEMENT, RISK MANAGEMENT STRATEGIES, RISK OF LOAN, RISK POOLING, RISK PROFILE, RISK REDUCTION, RISK SHARING, RURAL FINANCE, SAVINGS, SOLVENCY, STATE UNIVERSITY, SYSTEMIC RISK, TAX, TECHNICAL ASSISTANCE, TEMPERATURE, TERM CONTRACTS, TREASURY, TREASURY BONDS, TREATY, TROPICAL CYCLONES, URBAN DEVELOPMENT, WEATHER DERIVATIVES,
Online Access:	http://documents.worldbank.org/curated/en/2008/05/9475454/investigating-impact-climate-change-robustness-index-based-microinsurance-malawi https://hdl.handle.net/10986/6599
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