The objective is to protect small farmers and day labourers from losing their livelihoods due to the impact of a hurricane or a flood by offering microinsurance and other risk transfer solutions linked with disaster risk reduction and risk management.

Developing countries located in disaster-prone regions – such as the Caribbean – are particularly hard hit by the consequences of global climate change.

According to estimates from an Economics of Climate Adaptation study, losses caused by weather-related natural catastrophes already account for up to 6% of the annual gross national product in the five target countries – a figure that could increase by up to three percentage points by 2030, with hurricanes having the greatest loss potential in the region.

Weather risk insurance-related solutions – among them microinsurances – can play a key role in providing swift and unbureaucratic recovery aid following major losses caused by such natural catastrophes. However, these approaches have so far experienced difficulties in reaching out to a larger proportion of the vulnerable population due to a shortage of information on local weather risks, insufficient risk management and risk transfer experience on the part of the initiators, and the lack of a clearly viable reinsurance concept.

The project, funded to the tune of €2m for a period of three years, aims to over-come these obstacles by bringing Munich Re, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and specialist microinsurance broker MicroEnsure together under the umbrella of the Munich Climate Insurance Initiative (MCII).

In the next three years, up to three different insurance products will be developed and marketed in at least three countries across the region, and their acceptability to and effect on the target group put to the test. A new aspect of the products will be a close association with risk-reduction measures.