ILO: Large-scale disaster insurance coverage can help poor
The International Labor Organization (ILO) said insurance companies can help reduce the vulnerability of the poor to weather disasters and calamities on “meso and macro levels.”
In an ILO news release, Craig Churchill, head of the ILO Microinsurance Innovation Facility, said “climate cannot be insured, but its impacts can,” and that insurance companies can offer low-cost but large-scale schemes to communities, as microinsurance might not work as well when it comes to disaster coverage.
The microinsurance chief also said that the “meso” level of insurance scheme refers to larger communities, associations or cooperatives that can cover thousands to millions of people. On an even bigger scale, the macro level covers entire regions or countries, with hundreds of thousands to several million people insured.
“Despite the challenges, and with the help of subsidies, technology and innovative approaches, insurance schemes can play a key role in helping reduce the vulnerability of the poor to weather disasters and global warming,” he added.
Churchill said insurance companies in developing countries usually lack the essential data to create weather-related insurance products, stressing that “ a natural catastrophe can wipe out small or regionally focused portfolios.”
He said that microinsurance schemes that have tried to deal with weather risk even at the micro level could not succeed without subsidies,so insurance companies should go bigger.
“Meso level schemes are relatively new, but their potential for viability and scale seems quite promising,” he said..
The ILO report cited the Caribbean Catastrophe Risk Insurance Facility, which provides natural disaster insurance at the macro level at a much lower cost that can be obtained individually.
“ While not specifically microinsurance, interventions at the meso or macro level may be a more effective means of protecting the poor from natural disasters,” said the ILO report.
SOURCE: GMA News Online