Every year, millions of people are stricken by extreme weather events and natural catastrophes: crops fail, homes are flooded and property is destroyed. As a result of climate change, these weather hazards are becoming more severe and happening ever more frequently. Typhoons in Southern China are just one example.
The International Climate Initiative (ICI) is therefore financing, in China and elsewhere, projects in which innovative insurance solutions are being developed and tested. The Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH, in cooperation with the China Insurance Regulatory Commission (CIRC) and the Chinese Meteorological Administration (CMA), is developing insurance systems geared towards climate change adaptation. The project is now also receiving additional financial support from the Asian Development Bank (ADB).
The first thing the Chinese actors required in order to proceed was reliable information about weather hazards in all of China's provinces. That data is analysed as a basis for determining the population's need for weather insurance. The project thus identifies high-risk provinces where people have inadequate risk coverage. Experts then work together with local insurance companies to devise appropriate insurance products. Many small farmers in coastal areas, for example, are inadequately insured against the risks of typhoons and flooding, so the project is establishing insurance protection for various kinds of vegetables, fruit and other agricultural crops in Fujian Province.
To date, the project has concentrated primarily on developing suitable insurance products for the rural population. However, the mere existence of a product range does not necessarily make it accessible to the target groups. For example, some insurers are finding it difficult to secure licences for certain sectors or authorisation for their products, and the population has to be informed about the existing range of options. Here, favourable legal and regulative conditions play a decisive role. In cooperation with ADB, the project is therefore being expanded to include a policy advisory component. ADB is providing USD 750,000 for implementation purposes. Using these funds, GTZ is conducting a detailed analysis of the micro-insurance sector and providing advice to the insurance regulatory commission and other political decision-makers on how the government can give disadvantaged groups better access to insurance products.