In recent years, the Pacific has been facing intensifying climate risks — but new tools are also emerging in the region to help communities cope with those risks. One of these tools is parametric climate risk insurance, which delivers quick, pre-determined payouts after extreme weather events.
But how does it work in practice?
Since 2021, the Pacific Insurance and Climate Adaptation Programme (PICAP), jointly implemented by UNCDF, UNDP and UNU-EHS, has been working to strengthen communities’ financial preparedness and resilience through the development and scaling up of the first micro-level inclusive parametric insurance products in the Pacific that protect against excess wind and rainfall.
The first three waves of payouts to individuals and households in Fiji were made at the beginning of 2023, and the beginning of 2024 – triggered by heavy rainfall events, primarily in the country’s Western and Northern Divisions. A total of FJD291,450 (~USD130,000) was paid out to 1,680 individuals in Fiji, primarily through digital wallets.
How have climate risk insurance payouts helped people after extreme rainfall in Fiji?
In 2024, MCII, through UNU-EHS, in partnership with the Fijian Ministry of Agriculture and Waterways, conducted a survey to assess the impact insurance payouts had on the beneficiaries. With the survey, MCII seeks to study the real-world impact of insurance payouts on households, with a focus on how these funds were used, what challenges remain, and how insurance products offered can be improved to best meet the needs of the communities they are designed to protect.
A total of 600 individuals and small entrepreneurs were interviewed, including 480 insurance policyholders who had received at least one payout, and 120 uninsured individuals from the same communities. Women made up 45% of the sample, and men 55%. This approach allowed for a comparative analysis to better understand the role of insurance in building financial resilience against climate risks.
The key insights below represent initial findings from the study. Additional analysis is ongoing.
Key Insights – Impact of Parametric Insurance Payouts in Fiji
- Payouts address immediate needs: A vast majority of recipients used their payouts to purchase necessities such as food and water, or to repair damaged homes. Farmers often used the money to purchase seeds, tools or fertilizer, enabling them to restart their livelihoods quickly.
- Emotional relief for the communities: Although payouts did not fully cover all losses and damages after the heavy rainfall, over 60% of policyholders reported that receiving a payout either significantly or somewhat reduced their anxiety and uncertainty related to the climate events.
- Desire for more coverage: The survey provided valuable feedback for improving climate risk insurance products. Respondents appreciated the ease of access and timeliness of payouts, as well as the affordability of the product. Many also expressed a desire to expand coverage to include a broader range of climate hazards beyond rainfall and wind.
- Awareness is still a barrier: Both insured and uninsured participants, particularly the latter, highlighted the need for better information, outreach and support to help communities understand how these insurance products work and how they can benefit from them.
Voices from the Field: Reflections from PICAP Partners and Beneficiaries
These insights and first findings were shared and discussed during a dedicated webinar on March 28th, 2025. PICAP partners working directly with affected communities complemented the presentation with their reflections:
- Sun Insurance, a Fijian insurance company, welcomed the positive results but acknowledged ongoing challenges, particularly around data verification and beneficiary onboarding. For example, frequent changes in mobile phone numbers among policyholders creates a hurdle.
- Vodafone Fiji highlighted the role of mobile money in facilitating fast and secure insurance payouts. While digital platforms have proven effective due to widespread mobile wallet use, issues such as network access and SIM card availability continue to pose challenges.
- Cane Farmers’ Co-operative Savings & Loans Association (CCSLA), reported that 155 CCSLA members received payouts in 2023, followed by another 185 in early 2024. These funds provided crucial support for farmers and small business owners in recovering from extreme weather.
- A CCSLA member and insurance policyholder, who received a FJD500 payout, shared how the payout helped cover emergency household expenses and replant crops damaged by rainfall. She stated that she used to rely on savings and loans and now feels more in control thanks to her insurance policy. She has since encouraged others in her community to enroll.
The full webinar recording can be viewed here, and the presentation slides can be accessed here.
Looking Ahead
The Fiji Payout Survey offers rare, real-world insight into how parametric climate insurance performs and what impact it brings for the households in the Pacific.
The insights from the Fiji Payout Survey will inform future improvements in the design and distribution of parametric climate risk insurance products across the region. PICAP remains committed to working with partners to scale up these solutions, protect livelihoods, and build long-term resilience in the Pacific.