Business Quest 
Tobias Gitonga and Michael Kamau,General Managers – Reinsurance & Resident Actuary respectively at Minet Kenya.
By;Tobias Gitonga and Michael Kamau
As the world grapples with the escalating impacts of climate change, the need for robust strategies to enhance climate resilience has become more pressing than ever.Rising sea levels, intensified storms, prolonged droughts, and other climate-related events are causing unprecedented damages to communities, economies, and ecosystems worldwide.
In the face of these challenges, policymakers must seek innovative solutions that not only mitigate the impacts of climate change but also provide a safety net for those affected. An insurance-based approach to climate resilience emerges as a strategic and pragmatic solution that offers multifaceted benefits for individuals, businesses, and governments alike.
Traditional approaches to climate resilience have often been reactive, focusing primarily on post-disaster relief and reconstruction efforts. While essential, these measures fail to address the underlying issue of vulnerability to climate-related events.Climate change is projected to increase the frequency and intensity of extreme weather events, making it imperative to shift from reactive approaches to proactive ones that
prioritize risk reduction and preparedness.
An insurance-based approach enables the transfer of risk from individuals, businesses, and governments to insurance providers. By sharing the financial burden of climate-related damages, this approach ensures that the costs of recovery are not disproportionately borne
by the affected parties.This is especially critical for vulnerable communities and developing nations that lack the resources to cope with large-scale disasters.
Insurance providers have a vested interest in reducing the frequency and severity of climate-related events, as it directly impacts their bottom line. This creates a powerful incentive for insurers to collaborate with policyholders to implement risk-reduction measures, such as
building resilient infrastructure, adopting sustainable land-use practices, and improving disaster preparedness.
Insurance companies heavily rely on data to assess risks and set premiums.This emphasis on data collection and analysis can be leveraged to enhance understanding of climate vulnerabilities and inform evidence-based policymaking. By partnering with insurers, policymakers can gain access to comprehensive risk assessments that can guide the allocation of resources and development of targeted interventions.
Embracing an insurance-based approach fosters collaboration between the public and private sectors. Governments can work hand in hand with insurance companies to design and implement resilience-building initiatives, leveraging the expertise, financial resources, and risk management strategies that both sectors bring to the table.
Swift and effective recovery from climate-related disasters is crucial to minimizing economic disruptions. Insurance payouts can expedite the restoration of livelihoods and businesses, helping communities rebound more quickly and reducing the overall economic impact of climate-related events.
This approach has been particularly successful in cushioning pastoralists from loss of their livestock to drought. As a case in point, the government paid insurance cover worth KSh. 255 million to cushion 17,000 livestock keepers in Wajir, Garissa, Samburu, and Tana River
counties against drought between October 2022 and February 2023.
In the face of escalating climate risks, policymakers must adopt innovative and comprehensive strategies to enhance climate resilience. An insurance-based approach offers a promising path forward, addressing both the immediate needs of communities affected by climate-related events and the long-term imperative of reducing vulnerability.
By promoting risk transfer, incentivizing risk reduction, leveraging data, fostering partnerships, and stimulating economic recovery, this approach not only protects the interests of individuals and businesses but also contributes to building a more resilient and
sustainable future.
As we navigate the complexities of our changing climate, it is imperative that policymakers recognise the importance of embracing an insurance-based approach as a cornerstone of effective climate resilience efforts.
The writers are General Manager –Reinsurance and Resident Actuary respectively at Minet Kenya.
