Climate risk adaptation and insurance in the Caribbean


Climate change is a reality that can no longer be denied. As extreme weather events such as droughts, floods, hurricanes and storms increase in frequency and intensity, they place significant stress on societies and natural systems. These events lead to loss of income and productive potential, forcing affected low-income individuals to resort to a variety of desperate coping strategies that include: reducing food consumption, taking children out of school, borrowing money and selling assets. These strategies diminish their ability to cope with current and future climate change impacts. As a result, there is a growing need to explore meaningful options for managing and transferring risks associated with climate change.

Increasing people’s ability to manage, as well as to mitigate climate risk by spreading it among people and across time can significantly reduce their vulnerability and contribute to their long-term social and economic well-being, especially as part of a menu of options to incentivize risk aware behaviour. To increase social resilience as well as to incentivize sustainable adaptation measures, the Munich Climate Insurance Initiative (MCII) is implementing the Climate Risk Adaptation and Insurance in the Caribbean project in the eastern Caribbean.

The project has developed parametric weather- index based risk insurance products aimed at low-income, vulnerable individuals, and lending institutions exposed to extreme weather events. In the first phase of the project, the insurance products- Livelihood Protection Policy and the Loan Portfolio Cover- were introduced in Jamaica, Saint Lucia and Grenada. In the second phase the project implementation is proposed to be extended to Belize and Trinidad & Tobago.

This project is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) supports this initiative on the basis of a decision adopted by the German Bundestag.’


This partnership between the ILO’s Impact Insurance Facility and the Munich Climate Insurance Initiative (MCII) It focuses on the second phase of the Climate Risk Insurance and Adaptation in the Caribbean to build the capacity of both insurers and distribution channels (providers) and create awareness among consumers in the target countries in the Caribbean for weather index based parametric insurance products.


Activities under this project will accelerate the development of insurance for climate change adaptation in the Caribbean. Focus areas for the activities include the following:
  • Capacity building of insurance companies to carry out parametric insurance programmes. This will enable them to refine existing processes as well as develop new mechanisms and processes to serve the targeted population in an efficient manner.
  • Capacity building of distribution channels to work effectively with insurance companies in creating better outreach among target customers. The implementation of the parametric insurance programme requires multiple distribution partners to ensure effective outreach and uptake of the products by targeted customers, the will be focus on developing capacity of identified channel partners to engage efficiently with both insurers and customers
  • Stimulating demand through consumer education and awareness campaigns and create value. Creating awareness and educating the customers are critical for ensuring that the parametric products are understood and used by the target customers in a fitting manner and provide value.
In December 2019, MCII published its lessons learned from the project Climate Risk Adaptation and Insurance in the Caribbean (CRAIC). The CRAIC project was implemented by MCII, together with the Facility, CCRIF SPC, DHI and Munich Re.