Climate change: Insurance for 'Loss and Damage' is a puzzle

The UN climate talks, the COP23 concluded in November without deciding how climate adaptation measures will be funded in vulnerable countries such as Bangladesh. The discussion on the matter was put on hold until next year's climate summit. Also, the parties attending COP 23 expressed the need for another year to finalise the guidelines for implementing the 2015 Paris Agreement by 2020.

This followed a rejection by the developed countries of a demand for finance to cover climate change-induced Loss and Damage in vulnerable developing countries. However, the United Nations Framework Convention on Climate Change (UNFCCC) finally integrated 'Loss and Damage' in its current agenda, considered as a third pillar in the worldwide effort to combat climate change, along with mitigation and adaptation. The issue of 'Loss and Damage' has emerged because the existing mitigation commitments and actions are inadequate to prevent dangerous climate change-related impacts.

Like other vulnerable countries, the Bangladesh delegation expressed its dissatisfaction with the slow pace of progress at this year's COP. "Many things were supposed to be fixed here, including the source of climate finance, but that did not happen," said Dr. Hasan Mahmud, a former environment minister of Bangladesh and a member of the country's delegation to the climate summit.

The COP23, the first "Island COP" with Fiji as a presidency, provided a unique opportunity for Small Island Developing States and other vulnerable developing countries to raise awareness for their climate change-related challenges, and to bring their concerns into the centre of the negotiations.

The Warsaw International Mechanism for 'Loss and Damage' in 2013, got embedded institutionally within the international climate regime - providing a platform to explore and identify effective responses to climate change-induced loss and damage. 'Loss and Damage' is a multifaceted concept for the vulnerable countries, especially those disproportionally affected by climate change. However, developed countries have sought to limit discussion of liability and compensation by framing loss and damage as a matter of adaptation.

COP23 launched another major global initiative to provide insurance to 400 million poor and vulnerable people around the world by 2020. The project, called the InsuResilience Global Partnership, aims to provide insurance against the damage increasingly being caused by global warming.

The first Partnership Forum of this project brought together signatories and aspiring members in a joint effort to lay the foundation for effective collaboration in the field of financial protection against climate change. More than 30 partners from governments, civil society, international organisations, academia and the industry have already expressed their support and commitment. This Partnership Forum will take place annually to facilitate communication and exchange of information and knowledge among its members.

"The global partnership is a practical response to the needs of those who suffer loss because of climate change," said Frank Bainimarama, prime minister of Fiji.

But, international NGO ActionAid said that insurance is not a safety net for all. "Insurance might turn out to be a piece of the puzzle, but we can't pretend that it's a safety net for everyone," said Harjeet Singh, global lead on climate change for ActionAid International. "Insurance does sometimes help people who are impacted by floods or cyclones, but it won't be an option for those facing certain losses."

The premium for the insurance schemes for the various global initiatives has not been finalised yet. There is also no estimate of how much money is required for the severely affected countries suffering climate change-induced loss and damage in future. Hence, it is difficult to say that the insurance policy for vulnerability to climate change impacts is on the right track.

The writer, a communication graduate from University of Liberal Arts Bangladesh (ULAB), is freelance journalist at Climate Tracker.

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