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Investigating the Impact of climate change on the robustness of index-based microinsurance in Malawi

Author

Listed:
  • Hochrainer, S.
  • Mechler, R.
  • Pflug, G.
  • Lotsch, A.

Abstract

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.

Suggested Citation

  • Hochrainer, S. & Mechler, R. & Pflug, G. & Lotsch, A., 2008. "Investigating the Impact of climate change on the robustness of index-based microinsurance in Malawi," Policy Research Working Paper Series 4631, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4631
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    References listed on IDEAS

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    1. repec:dau:papers:123456789/3433 is not listed on IDEAS
    2. Christoph Bals & Koko Warner & Sonja Butzengeiger, 2006. "Insuring the uninsurable: design options for a climate change funding mechanism," Climate Policy, Taylor & Francis Journals, vol. 6(6), pages 637-647, November.
    3. Joanne Linnerooth-Bayer & Reinhard Mechler, 2006. "Insurance for assisting adaptation to climate change in developing countries: a proposed strategy," Climate Policy, Taylor & Francis Journals, vol. 6(6), pages 621-636, November.
    4. Lowe, Stephen P. & Stanard, James N., 1997. "An Integrated Dynamic Financial Analysis and Decision Support System for a Property Catastrophe Reinsurer1," ASTIN Bulletin, Cambridge University Press, vol. 27(2), pages 339-371, November.
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    Cited by:

    1. Daron, Joseph D. & Stainforth, David A., 2014. "Assessing pricing assumptions for weather index insurance in a changing climate," LSE Research Online Documents on Economics 59154, London School of Economics and Political Science, LSE Library.

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    Keywords

    Climate Change; Debt Markets; Hazard Risk Management; Banks&Banking Reform;
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