With the changing climate, natural disasters are becoming more frequent and destructive, affecting both lives and livelihoods. In 2016, Cyclone Winston affected 540,000 people in Fiji and in 2020, Cyclone Harold affected 300,000 people across Fiji, Tonga, and the Solomon Islands. As a result of climate change, shoreline erosion, flooding and landslides are also becoming more widespread claiming lives and affecting the livelihoods of local farmers who can lose one year of income in a minute, literally.

The impact of those natural disasters have posed the urgent need for reliable disaster risk financing, including pre-arranged instruments like insurance to minimize loss and damage. However, vulnerable communities, including farmers, micro-businesses, and informal sector workers face challenges to accessing insurance due to geographic remoteness and limited awareness.

To address this gap, the UN Development Programme (UNDP), UN Capital Development Fund (UNCDF), and the United Nations University Institute for Environment and Human Security (UNU-EHS) launched the Pacific Insurance and Climate Adaptation Programme (PICAP) in December 2020. This initiative supported by the Governments of New Zealand, Australia, the United Kingdom, and Luxembourg pioneers innovative, locally-led climate risk insurance solution known as Parametric Insurance. It is a type of insurance that pays out automatically when specific conditions, like a certain amount of rainfall, a period of drought, or strong winds, are met or exceeded. Parametric insurance is also called "index-based insurance" because these conditions are measured as indexes.

The full article is available at its original place of publishing undpasiapac.exposure.co