Evidence of demand for microinsurance for coping and adaptation to weather extremes in the Caribbean

Abstract

In regions highly exposed to climatic variability and longer-term climate change, vulnerable communities undertake a number of measures to manage the effects of extreme weather events. Results from a survey of 1059 low income persons in agriculture and tourism in Belize, Grenada, Jamaica and St. Lucia point to a need for a new balance to reduce risk, transfer risk, and effectively prepare for climatic stressors. This corroborates the findings from the IPCC Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaption (SREX). This article seeks to bolster limited evidence to understand the consequences of these measures, and assess whether financial risk management tools could complement current asset-depleting approaches: The results reveal that the dominant responses to managing extreme weather events included: using savings (36 %), borrowing (12 %) and government assistance (9 %). However, one-tenth of the sample is at risk from ‘doing nothing’, which can contribute to loss of productive capacity and income sources, loss of access to finance, depletion of assets, health problems and social isolation. Study respondents indicated a need for alternative financial risk management approaches. The results also indicate a moderate explicit demand for weather-related microinsurance. Overall the results reveal that where vulnerability and exposure to extreme weather events are high, and capacity is low, a rethinking of risk management measures is needed to reduce loss and damage for low-income people.