Climate Risk Adaptation and Insurance in the Caribbean (Phase II)

BACKGROUND

The United Nations Framework Convention on Climate Change (UNFCCC) underlines that the Caribbean is particularly vulnerable towards climate related hazards and the projected impacts are expected to be devastating due to limited adaptive capacity of small islands and low-lying coastal states.

The Caribbean region is located in an area prone to tropical cyclones and is highly exposed to hurricanes, weather hazards, and naturally induced disasters. Regional losses from extreme weather events alone over the past 30 years have been estimated to reach USD 3.3 billion. According to a regional adaptation strategy by the Caribbean Community Climate Change Centre (CCCCC), “the very existence of the Caribbean Community and Common Market (CARICOM) countries” is threatened by climate change.

Naturally induced hazards already represent a significant risk to inhabitants and economies in the Caribbean. In terms of damage incurred, hurricane induced wind damage has the largest damage potential, accounting for up to 90% of the overall damage in some of the Caribbean countries. The annual expected losses from wind storm, storm surge and inland flooding amount up to 6% of the GDP.

According to the MCII-GIZ demand study on micro-insurance in the Caribbean (2012), the existing coping strategies of vulnerable populations were negatively impacting their long term resilience.