Following the G7 meetings in Bavaria this month, the leaders involved committed to supporting disaster insurance as part of plans to tackle climate change. Particularly intensive support will be targeted at vulnerable countries, in order to affirm their efforts to deal with climate change-related disaster risk.
The G7 announced that they “will aim to increase by up to 400 million the number of people in the most vulnerable developing countries who have access to direct or indirect insurance coverage against the negative impact of climate change related hazards by 2020 and support the development of early warning systems in the most vulnerable countries”.
Part of this support comes in the form of a fund that the G7 leaders have agreed to establish in order to improve working conditions for those in the textile industry, and to provide compensation to those affected by disasters similar to the 2013 Rana Plaza factory collapse in Bangladesh where over 1,000 people died. The new fund will also work to reduce delays in providing this sort of compensation and will provide money to improve fire inspection and building safety regulations in general, thereby helping to develop the global supply chain. The International Labour Organisation will assist in the administration of the fund, which will require contributions from trade associations in developed countries represented by the G7.
Commentators have said that although several institutions, such as the World Bank, are well placed to deliver on these goals, to implement them by 2020 as they plan on doing will be a challenge. Further, others have said that insurance alone cannot solve the problem, but must be used as part of an integrated package of risk management interventions. This initiative should work to reinforce the recently implemented global framework developed by the UN Office for Disaster Risk Reduction (reported in a previous HFW insurance bulletin3) and generally to build resilience across the world in order to provide much needed support and in order to mitigate the risks to vulnerable countries.