Given that the latest spate of climate change related catastrophes affecting largely uninsured poor countries, should commercial insurance based policies be made available to these people?
By: Ringo Bones
It is a quite a sobering thought that over 90 percent of the surviving victims of Typhoon Haiyan that hit Tacloban City in Leyte of the central part of the Philippines back in November 8, 2013 don’t have any kind of insurance policy. A little over six months after the tragedy, a majority of the survivors are still scrimping and saving their own hard earned cash to fix their own homes and small business establishments since they don’t have any insurance payouts to collect and use to fix their own homes damaged by the most powerful typhoon on record so far to ever hit landfall.
Trevor Maynard of Lloyd’s of London says current models used to predict disasters use historical data and the insurance company’s latest actuarial studies have shown that hurricanes poses the greatest damage in terms of payout costs when it comes to insurance policies tailored to meet latest climate change related catastrophes. Given that the world’s major insurance providers dismiss providing insurance services for the world’s poorest uninsured since such business schemes are “not economically viable” from their perspective, could insurance providing schemes based on Muhammad Yunus’ microfinance banking be a solution?
Even though various kinds of microfinance insurance schemes already exists, creating one as a basis for a “insurance companies without borders” that would provide insurance coverage of climate change related catastrophes for the world’s poorest could solve the problem of typhoon and flooding victims unable to start over after their homes and businesses, livestock, farms, etc. are destroyed. Such solutions are likely to succeed given that they are congruent to existing conventional insurance underwriting schemes – except they are underwritten by a local microfinance banking scheme.