MCII was initiated as a charitable organisation by representatives of insurers, research institutes and NGOs in April 2005 in response to the growing realization that insurance solutions can play a role in adaptation to climate
change, as suggested in the UN Framework Convention on Climate Change and the Kyoto Protocol.
This initiative is hosted at the United Nations University Institute for Environment and Human Security (UNU-EHS), in Bonn (Germany). As a leading think tank on climate change and insurance, MCII is focused on developing solutions
for the risks posed by climate change for the poorest and most vulnerable people in developing countries.
We strive for a world where vulnerable people have access to and can afford protection against extreme weather. We want to empower them to better cope with the negative impacts of climate change, foster resilient societies and
enable sustainable development.
The Rising Challenge of Climate Change:
Over the past years changes in extreme weather and climate events have been observed. Trends in the frequency and intensity of many weather related extremes have increased significantly and are expected to accelerate even further.
The effects of climate change are already being felt around the globe, threatening livelihoods, reinforcing poverty cycles, impairing socioeconomic development and reducing overall resilience. Climate change impacts are projected to
worsen, especially if greenhouse gas emissions continue current trajectories.
Developing Countries Most Exposed:
The loss burden is most severe in vulnerable developing countries and, within these countries, among poor households and communities, whose contributions to global emissions are negligible. In some cases, the impacts have already
gone beyond the ability of communities and countries to recover and adapt, and affected people often lack the means to effectively manage the risks they are being confronted with.
Closing the Protection Gap:
Currently, 98% percent of the disaster load in developing countries is not covered through insurance approaches. In the face of environmental change and a growing number of weather extremes, vulnerable people and countries need
support in employing effective strategies to manage risks and unexpected shocks and build resilience to climate impacts. Risk transfer mechanisms, such as climate risk insurance – in conjunction with other disaster risk management
measures and strategies – can protect people against climate shocks by acting as a safety net and buffer shortly after an extreme weather event.
Insurance approaches can also increase the disaster preparedness of individuals and therefore alleviate the stress on government response mechanisms after an event. Ex-ante response mechanisms including meaningful insurance
coverage are currently neither available nor affordable for poor and vulnerable people. Thus they need to be built based on participatory procedures, and embedded into risk management approaches and relevant policy frameworks. There
is a need for effective public-private-partnerships (PPPs) to actively push the limits of insurability of climate-related risks. However, insurance is not appropriate to address some slow onset risks, such as sea level rise. Here,
alternative risk management solutions need to be brought to vulnerable communities.
Fostering International Dialogue:
The United Nations Framework Convention on Climate Change (UNFCCC) and its Paris Agreement, the Sendai Framework for Disaster Risk Reduction, the Addis Ababa Action Agenda on Financing for Development, the Sustainable Development
Goals, and also specific processes in the G20 and V20 provide the potential for international cooperation towards a systematic global approach on climate risk insurance. To add value for affected people there is a strong need to
raise awareness and help develop innovative solutions to protect poor and vulnerable people from increasing climate risks.
MCII finds and promotes effective and fair insurance-related solutions for the risks posed by climate change by bringing together experts from research institutes, the insurance sector, civil society, and climate adaptation
Through its unique set-up as a non-profit think tank and incubator, MCII provides a forum to explore solutions in creating incentives and changing structures for risk reduction for people with no access to risk management at
present, particularly the most vulnerable people in low-income regions. We want to add value to the most vulnerable people and communities, guided by the following principles:
(1) Integrated approach: Insurance-related solutions should be a part of comprehensive climate risk management strategies that place priority on preventing human and economic losses.
(2) Economic efficiency: Using risk-based pricing, insurance can provide an important signal to incentivize risk reducing behavior and thus contribute to an economically efficient adaptation approach.
(3) From solidarity to responsibility: Climate risk insurance solutions are mechanisms allowing to collectively manage losses that would overwhelm individual members of a group. Since poor and vulnerable
communities have contributed little to climate change, it is incumbent on countries with high per capita emissions to take their share of the responsibility.
(4) People-centered: Insurance-related solutions should be grounded on a human rights-based approach that strives for an inclusive, meaningful and accountable involvement of the people they are intended to serve to
effectively meet their needs and contribute to their empowerment.<br>Protection and insurance mechanisms promoted by MCII aim to foster a socially, ecologically and economically sustainable development process, particularly in
low-income regions strongly affected by climate change.
The Initiative’s purpose is the promotion of the requisite framework of public-private protection and insurance solutions for the fast-growing number of people worldwide affected by extreme weather and climate events, especially in
developing countries. The focus is primarily on solutions for people who have no access to risk management mechanisms at present. Specifically, we support the following goals:
Policy impact: Establish and strengthen international support structures to protect poor and vulnerable people through effective pay-out mechanisms as part of climate risk management. Promote insurance-related
approaches in cooperation with other organizations and initiatives and create political will for their implementation. Identify success stories and disseminate information and guidance on the factors that are necessary to design and
implement effective climate insurance-related mechanisms.
Enabling strategies: Create competencies at individual, organizational and collective levels and the necessary enabling frameworks and methods that support successful implementation of insurance-related approaches
for societal resilience. This includes the identification and promotion of risk preventing and loss reducing measures, the employment of climate risk management strategies and tools, as well as relevant operational guidance.
Practice partnerships: Foster partnership and dialogue to employ climate risk insurance that allow the public and private sectors to enhance countries’ resilience and to close the protection gap of poor and
vulnerable groups. We combine resources and expertise, and where appropriate utilize commercial competition to create added value for the end users through effective, demand-matching products and initiatives at scale.
MCII’s work is grounded in fact-based research and evidence. Through collaborative research and empirical insights from practice, we feed back to policy- and decision-makers, as well as technical peers, thereby
changing regulations and enhancing international aspiration and standards.
MCII strives to continuously analyze the added value of insurance-related approaches to covering societal needs related to climate change
The United Nations University (UNU) is the academic arm of the United Nations and acts as a global think tank. The mission of the Institute for Environment and Human Security (UNU-EHS) is to carry out cutting edge research on risks and adaptation related to environmental hazards and global change including areas such as environmentally induced migration and social vulnerability, ecosystem services and environmental deterioration processes and models and tools to analyze vulnerability and risks linked to natural hazards. The institute’s research promotes policies and programmes to reduce these risks, while taking into account the interplay between environmental and societal factors. Research is always conducted with the underlying goal of connecting solutions to development pathways.
UNU-EHS shares MCII’s goals to find possible ways to reduce risks and vulnerabilities of people particularly affected by the adverse effects of climate change. Both organizations support decision-makers with evidence based research and informed policy recommendations. Our partnership is characterized by complementing UNU-EHS’ portfolio of topics through its particular focus on developing public-private protection mechanisms and insurance-related solutions for those most vulnerable to climate change.
We have been a long-time partner of UNU- EHS reaching back to 2005. Currently, Dr. Zita Sebesvari represents UNU-EHS within our board as the interim Director of UNU-EHS.
Our project activities at MCII are predominantly implemented through the MCII Project Office, which acts as an academic section within the UNU-EHS system. Our operational work, thus, it is fully embedded within UNU-EHS. By focusing on risk transfer and financial protection approaches, our team complements other UNU-EHS sections’ research objectives and programmes. Collaboration takes place through implementing joint activities and projects. ASP, CLIMAFRI and FloodadaptVN are concrete project-level cooperations. Find out more about these projects later in Chapter 5.
Furthermore, we participate in the Joint Master Programme Geography of Environmental Risks and Human Security. The Master is an international degree programme with a research-oriented profile and it is jointly offered by the UNU-EHS and the University of Bonn.