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Article
Publication date: 18 May 2010

Stefan Hochrainer, Reinhard Mechler and Daniel Kull

Novel micro‐insurance schemes are emerging to help the poor better deal with droughts and other disasters. Climate change is projected to increase the intensity and…

Abstract

Purpose

Novel micro‐insurance schemes are emerging to help the poor better deal with droughts and other disasters. Climate change is projected to increase the intensity and frequency of disasters and is already adding stress to actual and potential clients of these schemes. As well, insurers and reinsurers are increasingly getting worried about increasing claim burdens and the robustness of their pricing given changing risks. The purpose of this paper is to review and suggest ways to methodologically tackle the challenges regarding the assessment of drought risk and the viability of index‐based insurance arrangements in the light of changing risks and climate change.

Design/methodology/approach

Based on novel modeling approaches, the authors take supply as well as demand side perspectives by combining risk analysis with regional climate projections and linking this to household livelihood modeling and insurance pricing. Two important examples in Malawi and India are discussed, where such schemes have been or are about to be implemented.

Findings

The authors find that indeed micro‐insurance instruments may help low‐income farming households better manage drought risk by smoothing livelihoods and reducing debt, thus avoiding poverty traps. Yet, also many obstacles to optimal design, viability and affordability of these schemes, are encountered. One of those is climate change and the authors find that changing drought risk under climate change would pose a threat to the viability of micro‐insurance, as well as the livelihoods of people requesting such contracts.

Originality/value

The findings and suggestions may corroborate the case for donor support for existing or emerging insurance arrangements helping the poor better cope with climate variability and change. Furthermore, a closer linkage between climate and global change models with insurance and risk management models should be established in the future, which could be beneficial for both sides.

Details

International Journal of Climate Change Strategies and Management, vol. 2 no. 2
Type: Research Article
ISSN: 1756-8692

Keywords

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Article
Publication date: 1 September 2004

Paul Freeman, Leslie Martin, Reinhard Mechler and Koko Warner

This paper addresses a critical problem in macroeconomic planning for natural disaster losses: how to incorporate potential future losses into current planning activity…

Abstract

This paper addresses a critical problem in macroeconomic planning for natural disaster losses: how to incorporate potential future losses into current planning activity. The authors develop a technique to integrate probabilistic natural hazard losses into macroeconomic planning models. Probabilistic losses to capital stock (direct losses) serve as input to a macroeconomic model, which consequently calculates the macroeconomic impacts. The macroeconomic effects calculated comprise the indirect effects of losing and not being able to replace capital stock sufficiently or in a timely manner, as well as the effects of diverting funds to relief and reconstruction activities. The modeling can serve as a tool for planning for the effects of natural disasters before they occur and for engaging in appropriate risk management activities.

Details

Disaster Prevention and Management: An International Journal, vol. 13 no. 4
Type: Research Article
ISSN: 0965-3562

Keywords

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Article
Publication date: 1 September 2004

Anne van der Veen

Tsunamis, droughts, earthquakes, hurricanes and floods are a constant threat to society. Where in the past the population at risk had to react on the consequences of…

Abstract

Tsunamis, droughts, earthquakes, hurricanes and floods are a constant threat to society. Where in the past the population at risk had to react on the consequences of disasters, at present society wants to be more in control. Due to the high costs of restoration, of the stress and of the loss of family and friends, a proactive policy in order to prevent disasters or at least to minimize the impact is required. Such a policy asks for a framework to decide on the risk society wants to take. Moreover, it is mandatory to agree on the way instruments preventing disasters are evaluated on their effectiveness. This special issue accounts for the contributions on the methodology of damage estimation by leading European and American economists. Introduces the subject and presents an overview of all papers.

Details

Disaster Prevention and Management: An International Journal, vol. 13 no. 4
Type: Research Article
ISSN: 0965-3562

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Article
Publication date: 8 October 2019

Shafiqul Islam, Cordia Chu, Leong Liew and James C.R. Smart

The purpose of this paper is to inspect disaster risk reduction (DRR) challenges from a political economy (PE) perspective and to explore how PE determinants facilitate or…

Abstract

Purpose

The purpose of this paper is to inspect disaster risk reduction (DRR) challenges from a political economy (PE) perspective and to explore how PE determinants facilitate or hinder effective DRR in Bangladesh.

Design/methodology/approach

A qualitative case study, using semi-structured in-depth interviews, official documents and literature review has been conducted to explore the current process and practices of DRR in Bangladesh. The specific focus is on the distribution of public spending on flood shelters implemented by the Department of Disaster Management.

Findings

The study revealed a number of findings, including that the interest and incentives of influencing decision makers matter; formal and informal institutions have influence; and the values and ideas of dominating stakeholders’ impact on decisions regarding public spending of DRR in Bangladesh. These PE factors often hinder efficiency by leading to overlapping efforts and inefficient use of scarce resources. DRR planners and practitioners need to take steps to mitigate potential risks from PE processes in the allocations of DRR funding by implementing improved distribution arrangements.

Originality/value

Despite many successes in dealing with disasters, Bangladesh faces several challenges, including better governance of funds. DRR challenges can be considered as a problem of PE, which concerns the distribution of resources, and includes how powerful decision makers affect economic choices. Prior research examining the challenges in DRR-related funding distribution from a PE perspective is limited. Therefore, this study attempts to fill this gap in the literature by focusing on the situation in Bangladesh from this perspective. The authors elaborate how PE determinants can function as both barrier and opportunities on the ground in DRR-related fund distribution and in the selection of project locations and beneficiaries.

Details

Disaster Prevention and Management: An International Journal, vol. 29 no. 3
Type: Research Article
ISSN: 0965-3562

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Article
Publication date: 2 February 2015

George Apostolakis, Gert van Dijk and Periklis Drakos

This study aims to offer a literature review on microinsurance, focusing on its financial performance and social impact. The aim is to review current research in…

Abstract

Purpose

This study aims to offer a literature review on microinsurance, focusing on its financial performance and social impact. The aim is to review current research in microinsurance performance. Over the past decade, microinsurance has aroused the interest of the scientific community. Scholars have monitored its development and have examined its impact on the poor’s ability of breaking out of the poverty trap.

Design/methodology/approach

A systematic-narrative method was used to review the relevant literature. In total, 64 relevant articles on investigating the financial performance and the effects of microinsurance programs on the poor’s well-being were reviewed, coded and followed by a narrative synthesis.

Findings

This review synthesizes current published data on microinsurance to provide practitioners and researchers with a better understanding of this important area. Microinsurance benefits the poor, as it reduces their vulnerability to poverty. Microinsurance has a twofold impact on an individual’s ability to overcome poverty. First, it has a direct impact on access to healthcare services and, second, it has an indirect effect on an individual’s economic status, by moderating risk vulnerability and improving income stability. Further research is necessary to reach concrete conclusions about the financial performance of microinsurance programs. Finally, the analysis of the literature revealed an absence of research regarding the impact of microinsurance on society and sustainable development.

Research limitations/implications

An understanding of the performance of microinsurance services is important. Therefore, the findings can be used by microinsurance practitioners to assess and improve their performance. Further, policy implications such as improvement of financial knowledge and social marketing via education polices to increase microinsurance awareness of its benefits are recommended.

Originality/value

This review provides a synthesis of the literature in microinsurance concerning its financial and social performance, and raises suggestions for future research.

Details

Corporate Governance, vol. 15 no. 1
Type: Research Article
ISSN: 1472-0701

Keywords

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