Unpacking climate risk insurance as warming storms threaten life

By last July was the second hottest month on record for the globe with scientists marking 2023 as the hottest that could usher in the eventual return of the El Nino weather come 2024.

In Kenya, experts are calling for more caution. On August 23, 2023, a local publication quoted Kisumu County Climate Change Director, Evans Gichana, saying, “Climate Change portends a grim future for Kenya and is a wake-up call for all of us to take urgent action to mitigate the effects of climate change.”

To illustrate this further, some parts of Kenya have witnessed severe droughts and the rest have suffered devastating floods.

With most climate-related catastrophes becoming regular, it is important to find an effective way to mitigate the risks, especially a solution that helps affected sectors bounce back.

This is best handled by climate risk insurance that involves providing cover that not only addresses the immediate aftermath of climate-related disasters but also proactively meets the financial burdens they impose in times of calamities such as floods, drought, earthquakes, as well as crop and livestock diseases.

Under climate risk insurance, providers work with policyholders to reduce the likelihood and severity of such events. Insurers achieve this by encouraging policyholders to invest in infrastructure and practices that are resilient to the impacts of climate change.

For example, a business might be prompted to build structures that can withstand stronger storms or install systems to manage increased water levels.

Another way was the launch of the Kenya Livestock Insurance Programme in 2015 which was implemented in six counties including Turkana, Wajir, Marsabit, Isiolo, Mandera and Tana River.

In 2017 alone, the programme disbursed a total of Sh494 million to support affected pastoralists. These disbursements played an important role in enabling farmers to procure essential resources such as animal feed, medications, and water for livestock.

Additionally, with the review of the Crops Act 2013, crop development, pest and disease control, climate change resilience and establishment of crop insurance have been given prominence while the Livestock Policy, 2020 advocates for increased access to insurance.

This cover is important for farmers to mitigate the impact of threats to ensure the resilience and sustainability of farming practices and livelihoods.

As interest in microinsurance products to mitigate climate change gains momentum, private insurance providers have found ways to enhance interaction between livestock keepers and livestock experts with a view to encouraging their active participation in commercial livestock keeping.

It is thus clear that mitigating the impact of droughts and floods through climate risk insurance offers emergency responses and long-term resilience-building.

The writer is the General Manager – Minet Risk Services (Corporate) at Minet Kenya.