Challenges of Developing Countries to Exploitation Non-structured Insurance Strategy to Climate Change Adaptation

The phenomenon of climate change has caused abnormal changes in the Earth's atmosphere and has a variety of consequences, including rising global average temperatures, rising sea levels, changes in rainfall, impact on the global economy, financial systems, etc. Given the impact of this phenomenon on different sectors, adaptation and mitigation strategies should be used to better understand the effects of climate change and reduce vulnerability.The wide consequences of climate change in the last 25 years in developing countries, including 95% of the world's deaths and the doubling of direct economic losses in low-income countries compared to high-income countries, have led to different plans with the focus on adaptation. Strategies for adapting to the effects of climate change include a wide range of non-engineering or non-structural strategies (such as education and insurance) and engineering or structural strategies (such as structural measures and management practices). The insurance industry reduces the catastrophic effects of climate and natural disasters and enables timely recovery by distributing losses and also reduces the burden of damage, as a measure of adaptation to climate change. It provides timely post-disaster liquidity and is associated with preventive and risk reduction activities. It also plays an important role in reducing the vulnerability of society to natural disasters related to climate change by supporting sustainable development goals.

The research method was based on the qualitative research method. Therefore, related scientific reports and sources were extracted and written documents were reviewed to extract the experiences of developing countries according to a comparative approach. A general understanding of the effects of climate change, underwriting, and product development were the three main classifications in developed countries that were analyzed to present the results. The selection of countries was based on the value of the Human Development Index in 2021. This index ranges between 0 and 1 and is used by the United Nations to determine the development of countries. Finally, Ukraine, Bangladesh, Thailand, Taiwan, Syria, Colombia, Morocco, Nigeria, Indonesia, Brazil, Pakistan, China, Sri Lanka, Kenya, Mexico, India, and Afghanistan were selected among developing countries.

The experience of developing countries in the general understanding of the effects of climate change shows that in recent years. global warming has led to rising temperatures in all countries and rising sea levels in coastal countries. In addition, the number of natural disasters caused by climate change, especially floods, droughts, and Tropical storms has increased in developing countries, which in many cases have been catastrophic, resulting in significant deaths and economic losses.Studying the underwriting and insurance programs in selected countries shows that in general, some countries do not have a practical plan in this field, some are researching and testing solutions in this field, and some establish microfinance institutions, insurance pools, and government agencies, etc., and have paid particular attention to agricultural insurance.With the increasingly negative consequences of climate change, a wide range of insurance products including index-based insurance, agricultural insurance, microinsurance, weather derivatives, green insurance, catastrophic bonds, and other types of securities has been considered by the government to secure financing post-disaster damages.

Because most compatibility options have long execution times, long-term planning and acceleration are crucial to closing compliance gaps. With the advent of the insurance industry as one of the largest industries in the world, it is expected that disaster safety nets will be provided to discuss regime adaptation and climate change. Insurance and alternative tools are effective in risk transfer and can play an important role in financing and reducing the vulnerability of human and natural systems. The experiences of developing countries in adopting effective approaches and tools to deal with climate change showed that in terms of recognizing and understanding the necessity of the issue, these countries, following the developed countries, realized the importance of the climate change issue and seek to compensate for the gap created between the existing level of capacity utilization and its acceptable level. Regarding underwriting and existing measures, there is a major difference in the approach of selected countries, which has led to a wide range of practical measures. These differences are due to the prioritization of different sectors and financing capacities in the country, which in some cases have used the help of international institutions. In reviewing the programs and development of insurance products, it was observed that in all selected countries, according to priority, the development of insurance products has been considered and, in some countries, leading to the development of index-based insurance and issuance of various securities to secure financing post-disaster damages.