Insurance of Climate Risks - between Private Provision and Public Intervention

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Background Paper Forum Climate Economics 10

This background paper summarizes the state of the literature and debates on the topic of insurance against extreme weather events. Insurance can mitigate the economic consequences of extreme weather events for households and businesses. However, despite the benefits of such insurance, demand by households and businesses, particularly in the Global South, is relatively low. Using the two main types of insurance - indemnity insurance and index-based insurance - the potentials and limitations of insurance solutions in climate change adaptation are highlighted. Special focus is placed on concrete and current insurance examples, which makes it possible to identify reasons for the partially low demand for the two insurance solutions. In addition, the distributional effects of insurance against extreme weather events are illustrated and the role of state intervention is discussed.

This background paper is only available in German. An english version was published in Review of Eco­nomics. You can find it here.

 

Authors

Kati Krähnert
Christian Hott
Daniel Osberghaus
Lutz Philip Hecker
Frank Wätzold
Lemlem Teklegiorgis Habtemariam
Svenja Fluhrer

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