Climate change poses significant economic and financial risks to governments worldwide, with insurers retreating from high-risk areas. Efforts are underway to integrate risk-sharing systems and insurance/capital markets to scale up Loss and Damage funding, emphasizing the need for public and private leaders from the Global South and developed economies. The UK government aims to integrate risk transfer, insurance, and innovative financial instruments into its aid and development financing approach to enhance disaster resilience in low- and middle-income countries. Research shows that wealthier nations could provide affordable protection against climate disasters for vulnerable countries, potentially insuring 100 of the world's most vulnerable nations for $10 million annually. However, poor and vulnerable countries are not benefiting enough from pre-arranged climate disaster finance, highlighting the need for increased use of PAF for climate- and crisis-vulnerable people.

Climate Risks and Financial Solutions