Scaling Uptake of Insurance in the Municipal Climate Resilience Toolkit Discussion Paper Part 3

The paper identifies parametric insurance as a critical tool for strengthening the financial resilience of cities in EMDEs, where less than 10% of climate-related losses are currently insured. It highlights a structural collaboration gap between municipalities and insurers, noting that only 5 of 16 mapped programs engage directly with municipal governments. To address this, the authors propose three priority actions: supporting affordable premiums through national and international funding, strengthening municipal capacity for risk-layering, and improving legal and regulatory enabling environments. The document argues that parametric insurance is a particularly effective entry point due to its ability to provide rapid liquidity and simpler product structures compared to traditional indemnity insurance.

• There is a significant insurance protection gap for climate-related losses in emerging markets and developing economies (EMDEs), with uninsured losses exceeding 90%.
• Parametric insurance is identified as a primary entry point for EMDE cities because it offers faster payouts and simpler structures that align with municipal financial capacities rather than asset values.
• An ecosystem mapping of 16 programs reveals a lack of direct municipal engagement and multistakeholder coordination, with only 5 programs engaging directly with municipal governments and none of the 3 coordination-focused programs including municipalities.
• Municipalities in EMDEs often lack the fiscal space to afford risk-based premiums, necessitating support from national governments, international donors, or development finance institutions (DFIs).
• Many municipalities lack the technical capacity to design cost-effective risk-layering strategies, which is essential for determining which risks to retain and which to transfer via insurance.
• Restrictive or unclear legal, policy, and regulatory frameworks—including tax treatment and procurement rules—increase transaction costs and discourage insurers from entering municipal markets.

APA

LaSalle, J. M., Abdullah, H., & Bansal, S. (2026). Scaling Uptake of Insurance in the Municipal Climate Resilience Toolkit Discussion Paper Part 3. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/07/CCFLA-Scaling-Uptake-of-Insurance-in-the-Municipal-Climate-Resilience-Toolkit.pdf

Chicago

LaSalle, John Michael, Hamza Abdullah, and Shreya Bansal. Scaling Uptake of Insurance in the Municipal Climate Resilience Toolkit Discussion Paper Part 3. Climate Policy Initiative, 2026. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/07/CCFLA-Scaling-Uptake-of-Insurance-in-the-Municipal-Climate-Resilience-Toolkit.pdf.

Wikipedia

{{cite report |last1=LaSalle |first1=John Michael |last2=Abdullah |first2=Hamza |last3=Bansal |first3=Shreya |title=Scaling Uptake of Insurance in the Municipal Climate Resilience Toolkit Discussion Paper Part 3 |publisher=Climate Policy Initiative |date=July 2026 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/07/CCFLA-Scaling-Uptake-of-Insurance-in-the-Municipal-Climate-Resilience-Toolkit.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lasalle2026scaling, author = {LaSalle, John Michael and Abdullah, Hamza and Bansal, Shreya}, title = {{Scaling Uptake of Insurance in the Municipal Climate Resilience Toolkit Discussion Paper Part 3}}, institution = {Climate Policy Initiative}, year = {2026}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/07/CCFLA-Scaling-Uptake-of-Insurance-in-the-Municipal-Climate-Resilience-Toolkit.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }