Rethinking premium support: Enhancing the impact and sustainability of climate risk insurance

This insight paper aims to support policymakers and practitioners as they seek to scale up financial protection against climate-related shocks through sovereign insurance solutions. It explores the complexities of international premium support and identifies core problems with current approaches to the allocation and design of premium subsidies. It proposes some basic but vital shifts needed in the way premium support is designed, allocated and provided to create a more inclusive, transparent and sustainable approach.

This paper’s central argument is that the current approach to premium support is not yet fit for purpose, and that donors and implementers need to make several key shifts to help achieve their aims of increased country uptake, to scale and sustain development impact. Taking these steps would help create a longer-term, more inclusive and impactful approach to subsidising insurance for climate risks. International premium support needs to be rethought with much greater reflection on the broader context of crisis financing, the opportunities for vulnerable country engagement, and on the need for greater transparency and accountability to ensure quality and impact