Awareness is growing in the industrialised countries that
climate change is not merely an immense environmental problem but
also a challenge to national economies in that weather catastrophes
cause billion-dollar losses.
Yet the impact on developing countries is immeasurably greater.
Their national economies are less powerful and significantly more
vulnerable, with the result that they are less able to cope with
losses, if at all. Between 1985 and 1999, natural catastrophes
caused losses equal to 13.4% of the gross domestic product (GDP) in
developing countries, as compared with only 2.5% in industrialised
Most of these countries are unable to meet the costs of weather
damage – either by higher taxes or by new
borrowings. The small Caribbean island states are already so
heavily in debt, for example, that they can hardly take out further
Development aid is increasingly used to subsidise
Industrialised nations and their citizens display an immense
willingness to donate money when regions are stricken by
weather-related catastrophes, especially in developing countries.
Donations and gifts help to pay for medication, medical assistance,
emergency accommodation, or the reconstruction of hospitals, roads,
According to World Bank information, it has paid out US$ 38bn to
developing countries in the form of subsidies and loans for
emergency aid in the last two decades. The Asian Development Bank
has similarly reported large payments for such purposes.
But this also goes to show that a growing share of financial aid
is not available for development projects in these countries but is
channelled into reconstruction projects following natural
catastrophes associated with climate change. This change, as
researchers now firmly believe, is primarily attributable to the
greenhouse gases emitted by industrialised and emerging
Munich Climate Insurance Initiative (MCII)
Climate change is a threat to the livelihood and health of
millions of people, particularly the poorest of the poor, who have
had no access to insurance up to now.
It was with this in mind that Munich Re launched the Munich
Climate Insurance Initiative (MCII) in 2005, whose mission is to
develop insurance solutions that address the consequences of
climate change. One of its focal areas is developing countries
because it is in particular the poor people of this world that need
to be given a chance of protecting themselves more effectively in
The basic idea underlying the initiative is to create a balance
between the emitters of greenhouse gases and the developing
countries hit by the effects of climate change. MCII shows that
Munich Re is looking beyond traditional reinsurance business to
launch new and innovative solutions in an ever-changing risk
The initiative is the only one of its kind in the world. It brings
global insurance players to the same table as UN organisations,
non-governmental organisations (NGOs), and leading scientists.