Introducing climate insurance products for disaster-vulnerable communities, their livelihoods and infrastructure represents the cornerstone of climate risk mitigation policy, indicated Mr Hamza Haroon, regional director for South Asia of the Climate Vulnerable Forum - Vulnerable 20 (CVF-V20).
He underscored the critical importance of addressing the needs of the most vulnerable communities through disaster insurance programmes in Pakistan.
Speaking at an event last week on the sidelines of COP29 in Baku, he said that engaging insurance companies to introduce different disaster insurance plans for vulnerable sectors will be a crucial step by different relevant government organisations including the Finance Ministry and Climate Change & Environmental Coordination Ministry.
Pakistan’s climate change secretary Aisha Moriania, also speaking at the event titled “Pakistan and the Global Shield”, said the costs of most large-scale natural disasters are retained in the government books and only a few disaster-risk insurance or non-insurance instruments are avaiable.
“Unfortunately, insurance penetration, which could be crucial in mitigating financial losses, remains limited, and is less than 1% of the country’s GDP,” she added.
Golden Shield against Climate Risks
Ms Romina Khurshid Alam, the Pakistani Prime Minister’s coordinator on climate change, said that escalating adverse fallouts from climate change including extreme weather events, rising sea levels, and prolonged droughts have underlined the urgent need for climate-vulnerable developing countries to hammer out comprehensive strategies to address loss and damage in vulnerable communities.
Integrating disaster risk financing into broader loss and damage efforts is a crucial step toward building resilience, ensuring timely response, and supporting long-term recovery, she emphasised.
“By combining innovative financial tools with inclusive, data-driven strategies, governments, and global partners can mitigate climate risks, support recovery, and foster resilience,” Ms Alam said.
She said that discussions during COP29 between climate and disaster insurance experts and senior officials of the ministry explored the pressing gaps in pre-arranged financial protection—particularly in public infrastructure, agricultural livelihoods, and small businesses—and how the Global Shield can bring value by aligning development efforts, fostering a country-led process, and leveraging pre-arranged financing instruments.
Global Shield aims to provide and facilitate more and better pre-arranged protection against climate and disaster-related risks for vulnerable people and countries. The Vulnerable Twenty Group (V20) together with the Group of Seven (G7) and other supporting countries launched Global Shield in November 2022. Pakistan is the first country in Asia to initiate access to support from Global Shield. Officials handed over Pakistan's ‘Request for Climate and Disaster Risk Finance and Insurance Support’ to the financing vehicle on 20 November.
Pakistan’s Ministry of Climate Change & Environmental Coordination released a statement comprising extracts of speeches made by Ms Alam and other officials at the event.