Connecting insurance and sustainable development

The report argues for the importance of insurance regulation in protecting human rights against climate risk and natural hazards, thus highlighting the link between insurance, resilience, and sustainable development. Adequate coverage against these risks will be crucial as extreme weather events, droughts and other natural disasters are on the rise due to climate change.

Facilitating access to insurance: The role of regulation

The report highlights the importance of access to insurance and argues that regulation is essential in facilitating access to insurance services. In particular, regulation needs to enable efficient and convenient distribution channels and aim towards customer-focused outcomes. Barriers to entry in the insurance sector, such as high capital requirements, should be lowered to facilitate more competition and innovation in the sector.

Protecting human rights through insurance regulation

The report argues that the critical role of insurance regulation is to protect human rights through ensuring that insurance entities manage natural hazard exposures. Duties to protect human rights in the context of natural hazards have been highlighted by the UN General Assembly and other bodies. Insurance can protect basic human rights, such as right to life, livelihood, and shelter, in various ways: it provides financial protection against losses; it can influence risk reduction and resilience through the conditions and incentives of insurance contracts; and, it enables financial inclusion, access to credit, and creates deeper reserves of investment capital at individual and collective levels.

Protecting economically challenged families: The Philippines case

The report uses the Philippines case of CARD MBA to illustrate the importance of more comprehensive insurance coverage in an era of increasing climate risk. CARD MBA, the largest micro-insurer in the Philippines, provides insurance and safety net services to the economically challenged families of the country. Today, CARD MBA covers around 11 million people in the low-income segment, 80% of whom live below the poverty line. The report cites the need for a stronger regulatory environment created by the government as a potent partner in the fight to eradicate poverty.

Recommendations for financing for development: Addis Ababa Accord and Plan of Action

The report provides policy recommendations for Financing for Development post-2015 and para-phrases the ‘Addis Ababa Accord’ and ‘Plan of Action’. Among the recommendations, the report calls for insurance regulation to be included more explicitly in Addis Ababa documents as a specific policy instrument to protect populations and assets from climate risks and natural hazards.

Overall, this report stresses that in the context of natural hazard risk, insurance systems have the capacity to safeguard human rights to life, livelihood and shelter and thus become an integral part of the fight for common goals such as economic prosperity, social wellbeing, and environmental sustainability. Thus, the report advocates for insurance regulation and innovation to support these policy goals in a more sustainable and integrated way.