Page 30 - The Insurance Times October 2024

Climate Change and Its

Impact on Inclusive

Insurance: Safeguarding

Vulnerable

Communities

As climate change intensifies, its impact on vulnerable communities-particularly those at the
bottom of the economic pyramid-has become increasingly apparent. These populations, often
residing in developing countries, face heightened risks from climate-related events such as floods,
droughts, cyclones, and extreme heat.

A s climate change intensifies, its impact on 1. Agriculture and Food Security

vulnerable communities-particularly those at the
Smallholder farmers in regions like sub-Saharan Africa, South
bottom of the economic pyramid-has become
Asia, and Southeast Asia are particularly at risk. These
increasingly apparent. These populations, often
residing in developing countries, face heightened risks from farmers depend on predictable weather patterns for their
crops, but climate change is making rainfall patterns
climate-related events such as floods, droughts, cyclones, and increasingly erratic. Droughts, floods, and extreme weather
extreme heat. Without access to formal financial services, events have become more frequent and severe, leading to
they are disproportionately exposed to climate risks that can crop failures and food insecurity. In 2024, droughts in the
erode their livelihoods and push them deeper into poverty. Horn of Africa have already resulted in massive crop losses,
exacerbating hunger and poverty in the region.
Inclusive insurance, designed to offer affordable protection
to low-income and vulnerable communities, has emerged The vulnerability of these communities is further
as a critical tool in mitigating the effects of climate change. compounded by their limited financial safety nets. Most
In 2024, a range of innovative insurance products and smallholder farmers lack access to formal banking services
models are helping to safeguard smallholder farmers, and insurance, leaving them to bear the full brunt of climate
fishermen, and other vulnerable groups against the growing shocks. When crops fail, they often resort to selling off assets,
threat of climate-induced disasters. reducing household spending on essential needs, or taking
on debt-all of which perpetuate the cycle of poverty.
The Disproportionate Impact of Climate
2. Urban Poor and Coastal Communities
Change on Vulnerable Communities In addition to rural farmers, urban poor populations and
Climate change is no longer a distant threat-it is already coastal communities are also at significant risk. Rising sea
disrupting lives, economies, and ecosystems around the levels and coastal erosion threaten the livelihoods of millions
world. However, the effects are not felt equally. Vulnerable of people living in low-lying areas, while urban slums are
communities, especially in developing countries, face the particularly vulnerable to flooding. In countries like
most severe consequences due to their reliance on Bangladesh and the Philippines, where large portions of the
agriculture, fishing, and natural resources for survival. population live in flood-prone areas, climate change-induced

The Insurance Times October 2024 27