AXA Climate works with public sector entities and international development institutions worldwide to protect vulnerable populations from climate-related risks, helping them recover faster and building their resilience. By combining the strengths of the public sector and the deep expertise of the insurance industry, Public-Private Partnerships are one of the most efficient ways to tackle climate risks and bridge the insurance protection gap globally.
Public Sector Solutions for Natural Catastrophes
Natural disasters already cost the global economy more than USD 300 billion on average per year as well as having a major impact on people’s well-being. Much of this burden falls on the public sector and the fiscal impact on a government’s budget can be sizeable. The combination of climate change, a growing population and increasing exposure of assets will amplify this catastrophic impact.
In the face of natural disaster risks, sovereign and sub-sovereign entities are increasingly moving towards a proactive approach using parametric insurance. This type of insurance uses natural hazard parameters to trigger fast payouts, providing a quick, flexible and transparent disaster risk financing solution.
To build resilience and contribute to sustainable and inclusive economic development, AXA Climate provides parametric insurance solutions to all levels of governments, working closely with international institutions such as the World Bank and the United Nations through the Insurance Development Forum. AXA Climate can support in the modelling, design and establishment of such solutions and already acts as a lead reinsurer and technical advisor for many of the major Public-Private Partnerships covering natural catastrophe risks such as the Caribbean Catastrophe Risk Insurance Facility (CCRIF), the Pacific Catastrophe Insurance Company (PCRIC) and the African Risk Capacity (ARC).
Climate-related perils we protect against :
Public Sector Solutions for Agriculture
The agriculture sector and the global food system can be severely impacted by climate-related risks especially in developing countries. Climate change will likely increase these risks with significant reductions in yield projected in the coming decades. Public sector support is needed to protect farmers, with insurance one of the key instruments.
AXA Climate works with governments and international institutions in designing climate insurance schemes that build farmers’ resilience as well as supporting the largest agriculture programmes globally. These use parametric triggers based on weather parameters from weather station or satellite data as well as area-based yield indices based on crop cutting experiments. Partners include the World Bank’s Global Index Insurance Facility with whom AXA has an MoU, the West African Development Bank and the World Food Programme.
Setting up an agriculture insurance programme to protect farmers
Analyse agricultural risk
Identify targeted crops/livestock and covered areas and undertake weather risk modelling and analysis.
Create agricultural network
Build partnerships with key actors in the crop production and financing sectors (banks, distributors) and engage with governments and relevant stakeholders.
Assess availability and quality of yield, weather station and satellite data.
Define agricultural phases and create index, selecting triggers for insurance payouts.
Compare indices with historic losses to calibrate product.
Public Sector Solutions for Climate Adaptation
Local and national governments face the complex challenge of understanding the impact of various climate change scenarios on their economies and populations and putting in place effective adaptation strategies to manage and reduce this risk. These adaptation plans require a long-term and system-wide perspective that take future uncertainty into account and give flexibility. Getting it wrong could be very costly.
AXA Climate can provide government entities at all levels with the quantitative decision-making tools to successfully achieve their local and national adaptation objectives. This is done by modelling current climate risk and exposure for example for a city or for a country’s agriculture sector and projecting this forward to determine potential future risk under various climate change and exposure growth scenarios. Adaptation measures, such as resilient infrastructure and nature-based solutions, can then be compared based on their relative benefit in reducing the risk and their cost.