Indemnity insurance
A (re)insurance contract which pays out compensation worth the ultimate net loss of a specific asset. This type of insurance can be useful in protecting high-value assets such as homes, where there is a relatively narrow scope of potential loss. Insurance payouts are determined based on an assessment of losses after an event has occurred (InsuResilience Global Partnership 2020).
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.
Read moreVulnerability
Conditions that increase how severely people or communities are affected by hazards.
Covariate shocks
Shocks affecting many households at once where losses are shared across the same community.
Catastrophe bond
A catastrophe bond (cat bond) is a risk-transfer financial instrument that allows governments or insurers to transfer disaster risk to capital market investors.
International development financing
Public funding flows supporting development objectives in lower income countries.
Basis risk
The gap between measured indicators and real losses causing payouts to differ from actual damage.
Adaptive social protection
Social protection systems that adjust to shocks, helping vulnerable people prepare, cope and recover over time.
