This paper is part of our COP28 content, aiming to examine the role of parametric insurance in mitigating climate change.
As climate change continues to increase flood risk around the world, governments face the challenge of quantifying this risk. While historical data may not be an accurate guide to future events, parametric insurance offers a solution.
Parametric insurance, an alternative risk-transfer instrument based on forward-looking models, can help beneficiaries to strengthen their capacity related to floods and improve climate resilience. Stuart Network, a non-government organization (NGO) focused on disaster relief, and African Risk Capacity, a risk pool for governments, demonstrate how parametric solutions can work in practice by enhancing climate resilience in disaster-prone regions of the world.
Looking ahead, the continuous improvement of flood risk data and parametric risk transfer mechanisms will be vital to coping with and adapting to climate change.
