Habyarabatuma, a smallholder farmer who lives with his wife and four children in Kamonyi, southern Rwanda, grows maize on a 2.5-acre plot. He used to worry every time the growing season came around. He worried about the rains. If they didn’t come, and the crops failed, would he be forced to sell the family’s goats again just to see them through until the next season? It was a precarious livelihood.

Photo: ACRE Africa 

People like Habyarabatuma, who played no part in creating the climate crisis, are now finding themselves on its frontlines. Smallholder farmers, pastoralists, and others whose livelihoods depend on predictable weather patterns are especially vulnerable. One failed crop can wipe out years of hard work and trigger a descent into a vicious cycle of poverty.

In 2014, ACRE Africa introduced weather index microinsurance to the area and Habyarabatuma took out a policy. When a drought struck that same year, the policy paid out, providing a safety net for Habyarabatuma and his family. Insurance has also allowed him access to a small bank loan for the first time, enabling him to make further investments in his farm, improve its productivity and generate additional income to pay off the loan and reinvest the next season.

Climate risk insurance has been a success story for Habyarabatuma and others like him, whose stories we tell in our new policy report ‘Weathering a Risky Climate. The report, launched today ahead of the World Humanitarian Summit, highlights the unprecedented opportunity for donors to reach an additional 400 million vulnerable people with climate risk insurance by 2020 through the G7 ‘InsuResilience’ Initiative. It brings together a weight of evidence about the protective, promotive and transformative effects of insurance in building climate resilience. The report also includes a series of case-studies demonstrating the real impacts of cutting-edge weather-based insurance programmes.

However, in the report we argue that donors will fail to realise the potential of climate risk insurance to reduce poverty for hundreds of millions of people unless they take a principled approach towards investing long-term funding that benefits the most vulnerable. We have developed a new set of ‘Pro-Poor Principles for Climate Risk Insurance’ as a guide to the kinds of high-quality investments that we want to see donors follow.

Part of this is recognising that insurance is not a silver bullet. It cannot work effectively as a standalone solution to the impacts of extreme weather events. Rather, it must be seen as part of a much broader approach to climate risk management. This means that public investments in risk financing should not replace, but can bolster and complement, investments in disaster risk reduction, climate adaptation, and social protection.

Why now? There is strong political momentum on this issue. From the G7 InsuResilience Initiative launched last year to the Paris Climate Summit, we have seen some donor countries – especially Germany and the UK – show real leadership. Amongst developing countries, some 15 have already introduced weather-based insurance programmes that target individuals directly, and some 20 have established institutional-level disaster risk financing. Innovative regional risk pools now exist in Africa, the Caribbean and the Pacific, and discussions are underway about a new risk facility for Asia.

As just a few examples of microinsurance programmes supported by developing country governments, India recently announced a new nationwide ‘National Crop Insurance Scheme’, with huge ambitions of reaching 50% of the country’s farmers by 2018. In Kenya, the government has launched the ‘National Agricultural Insurance Programme’ and the ‘Kenyan Livestock Insurance Programme’ to cover small-scale farmers and herders against weather-related crop failure and loss of livestock. The Government of Ethiopia recently launched a new vegetation index-based microinsurance product, with the intention of scaling up coverage to 15 million low-income farmers by 2020.

On 23-24 May, world leaders will meet in Istanbul for the World Humanitarian Summit – and climate risk insurance is on the agenda. The international community will commit to invest in smart and efficient risk financing mechanisms that proactively build resilience before disasters strike, rather than reacting afterwards at staggering human and economic cost. £1 invested in insurance can save more than £4 in averted humanitarian assistance.

RESULTS UK is calling on the UK Government and other partners to make ambitious new commitments at the World Humanitarian Summit to scale up their funding for climate risk insurance, especially microinsurance programmes that cover vulnerable individuals directly. We are also calling on them to improve the quality of these programmes. We offer the Pro-Poor Principles for Climate Risk Insurance as a gold standard for donors to ensure that their investments have maximum impact in reducing vulnerability for the poorest people.

Read RESULTS UK’s new report, Weathering a Risky Climate and take action in our Risky Business campaign.