Empowering Women in Climate Resilience: The Role of Insurers in Bridging the Gender Gap

"Everywhere, women and girls face the greatest threats and the deepest harm. Everywhere, women and girls are taking action to confront the climate and environmental crises. And everywhere, women and girls continue to be largely excluded from the rooms where decisions are taken."*

Quote: Antonio Guterres, United Nations Secretary-General
*Read the full report here.

It is well-documented that climate change is increasingly affecting and displacing populations globally. Communities, economies and ecosystems are inextricably linked and seriously impacted by physical and transitional climate events across all regions of the world. The UN describes climate change as a ‘threat multiplier’ because of its ability to exacerbate existing socio-economic tensions around the globe.¹

As a result, there is increasing focus on ensuring a just transition away from fossil-fuel reliance, which must include considering how climate change impacts certain groups in society. As the risks of climate change continue to increase, marginalised groups often bear a disproportionate burden, exacerbating pre-existing vulnerabilities. This is particularly true for women and girls.

Women are disproportionately threatened and affected by climate change.

One of the most immediate and severe consequences of climate change is more frequent and extreme weather events – from typhoons and flooding to droughts. Extreme weather events can destroy livestock, crops and freshwater supplies, and stoke civil unrest and conflict by limiting access to resources. Extreme weather can render densely inhabited areas uninhabitable, resulting in displacement and forced migration that is approximately five times more likely to affect the inhabitants of low- and lower-middle income countries.²

The struggle to find safe shelter from extreme weather events is experienced predominantly by women. For example, a 2016 study by the Asian Development Bank indicated that the mortality rate associated with cyclones in Bangladesh is far greater for women than it is for men, mostly due to the lack of female-friendly shelter facilities and the fear of (or actual) gender-based violence (‘GBV’).³ Women often face an increased threat of domestic violence and GBV during climate disasters, as reported in a study by the Red Cross and Red Crescent Societies in 2022.⁴ During extensive droughts in Micronesia, for example, women experienced a rise in rape and abuse as they were often driven to walk farther afield to access water wells;⁵ while higher levels of alcohol consumption by men after a cyclone in Myanmar contributed to a 30% increase in domestic violence.⁶

Climate change disasters are further reducing vital access to healthcare for women and girls, including access to sexual and reproductive healthcare for family planning, sexually transmitted diseases, childbirth, and life-saving medical interventions. This increases the incidence of preventable disease and maternal death.⁷ Certain diseases, including those common in refugee camps, are also aggravated by climate change. The WHO predicts that malaria and heat stress will cause around 250,000 additional yearly deaths between 2030 and 2050.⁸ 

Often, women are forced to become sole heads of households, with men more likely to migrate, and in certain communities women cannot own land and consequently face malnourishment. Additionally, girls are frequently forced to withdraw from schooling, further preventing social progression, improved living standards and removal from poverty, and perpetuating the gender gap for another generation.

Governmental and intergovernmental organisations have identified the need to address gender inequality in conjunction with climate change. In addition to governments, the onus is increasingly being put on organisations and industries, such as insurers, that have the necessary risk management expertise and global influence, to pioneer economic solutions to these issues and build widespread resilience. 

Insurers can help combat gendered risks and effects of climate change.

The insurance industry has the potential to lead the way in mitigating climate-related risks whilst bridging the gender gap for those most adversely affected by climate change, to ensure a just transition and simultaneously create opportunities for sustainable business streams. Insurers can start by identifying at-risk communities, such as women and girls and other vulnerable groups, and tailoring innovative insurance solutions. As a recent example, in May 2024 ICICI Lombard and Swiss Re made payments to 46,000 women in India enrolled in the Women’s Climate Shock and Insurance and Livelihoods Initiative during a heat wave, through a parametric insurance product which paid out a portion of daily wages once temperatures reached 43.6oC.⁹

Many countries and communities are under-prepared for natural disasters as they lack effective prevention measures and response initiatives, instead relying on post-disaster financing mechanisms, like borrowing and budget reallocations, which place economic stress on domestic resources and result in slow recovery. One possible solution is strengthening pre-disaster (ex ante) funding arrangements, which transfer the financial risks of disasters and enable insurers to implement effective disaster management strategies. 

Micro-insurance schemes

In 2022, less than 10% of natural disaster losses in developing countries were insured.¹⁰ Micro-insurance schemes offer an opportunity to improve this figure by providing low-income households with direct protection against various risks in return for smaller premium payments. Micro-insurance products are those suitable for individuals or households making between USD$2.00-$20.00 per day on a purchasing power parity basis (discussed more broadly in this Insurance Development Forum report, co-authored by Clyde & Co).

The R4 Rural Resilience Initiative’s insurance products, for example, supported 400,000 households in 2022 by offering cover to farmers against weather-related risks like drought and catastrophic flooding.¹¹ This layer of protection enabled farmers to invest in riskier but more lucrative projects so they could grow their savings and subsequently access financial services. The scheme has been a source of empowerment for women who are key decision-makers in allocating insurance payouts; in Kenya, women made 51% of the decisions regarding the use of payouts under this programme.¹² Microinsurance therefore not only acts as a valuable risk management tool to encourage economic stability amongst poorer rural households, but also helps promote women as financial leaders in their communities.

A recent project carried out by the MicroInsurance Centre at Milliman, George Washington University’s Capstone Program and the INSURED program, emphasised the importance of creating specific spaces for women's concerns and thoughts to be openly voiced. For instance, creating single-sex focus groups proved critical in their research in Tigray, Ethiopia.  The research found that female farmers in Tigray were less likely to interact with local agricultural extension agents or cooperatives than men.¹³ Female farmers had less access to insurance products, despite women’s active role in the agriculture industry and their desire to understand their insurance position. 

Insurers could seek to make insurance products more accessible and understandable to women, promoting a more inclusive insurance strategy. This will be essential to tackling the unequal effects of climate change and reaching a broader range of potential policyholders.

Macro-insurance schemes

To provide large-scale protection for 500 million people who will be most vulnerable to climate shocks by 2025, as pledged by G7 countries under the InsuResilience Global Partnership Vision 2025,¹⁴ the insurance mechanisms employed must be scalable; this requires macro-insurance. 

One example is the African Union’s African Risk Capacity Group, a risk pooling platform whose insurer, ARC Ltd., provides macro-insurance products to the African Union Member States.¹⁵ The countries pay through national budget processes, and any payouts under the policy are distributed in accordance with pre-approved contingency plans. Post-disaster responses are therefore faster and more consistent, providing more effective relief to those hit hardest by climate shocks.

From Inclusivity to Prosperity

By integrating gender considerations into their policies and innovative solutions, insurers can elevate their access to, and understanding of, the market of existing and potential female insureds. 

As exemplified with the Ethiopian female-led agricultural communities, women form a large and under-accessed market of potential customers who require insurance cover but are not being provided with adequate access compared with their male counterparts. By creating new information channels with women across the world, insurers could close the gender coverage gap and, in turn, impact wider communities and their global supply chains.

Insurance companies’ success depends on the quality of the information they use to price their products and weigh up the amount of risk they take on against the financial returns. If insurers turn a blind eye to key information like gender disparity, or the fact that a significant proportion of the population are uninsured, this will affect their risk metrics and overall insurance coverage pricing, impacting their exposure to large payouts and influencing the dynamics of reinsurance and risk transfer.¹⁶

Closing the Gap

The threat climate change poses to human lives and wellbeing cannot be underestimated. In the last 50 years, there has been a five-fold increase in weather-related disasters.¹⁷ The world is at a pivotal point in confronting climate change and insurance protections, alongside other risk management strategies, may temper the dangers posed to the most vulnerable groups.

As set out in our Resilience Report on inclusive insurance, one of the most effective ways in which insurers can capitalise on this opportunity is to consider how they can successfully penetrate uninsured markets and help to bridge the global protection gap, offering ‘inclusive insurance’ to a much wider audience. Whether through improving female access to insurance information or designing gender-inclusive products, insurers are therefore critical drivers of the just transition. With a combination of micro- and macro-insurance measures and investment in innovative insurance products, the insurance industry is well-placed to work with governments and stakeholders to drive risk mitigation, resilience and financial stability in the most climate-vulnerable communities.

¹Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace | COMMISSION DE CONSOLIDATION DE LA PAIX
²Oxfam, Uprooted by Climate Change: Responding to the growing risk of displacement (2017)
³Building Gender into Climate Finance: ADB Experience with the Climate Investment Funds
⁴United Nations Office for Disaster Risk Reduction, Global Assessment Report on Disaster Risk Reduction (2022)
⁵A Crisis within a Crisis: Climate Change and Gender-Based Violence - The Asia Foundation
⁶Ibid (A Crisis within a Crisis: Climate Change and Gender-Based Violence - The Asia Foundation)
⁷United Nations Population Fund and Queen Mary University of London (2023). Taking stock: sexual and reproductive and health and rights in climate commitments – a global review
⁸Public health and environment (who.int)
⁹Insurance Helped 46,000 Indian Women Avoid Deadly Work During Heat Waves (insurancejournal.com); Extreme heat triggers novel payout for over 46,000 women in India | Swiss Re
¹⁰Natural disaster risks - Rising trend in losses | Munich Re
¹¹World Food Programme, R4 Rural Resilience Initiative (November 2023)
¹²Ibid (World Food Programme, R4 Rural Resilience Initiative (November 2023))
¹³International Fund for Agricultural Development, Talking about climate risk insurance with women in Ethiopia: How to improve value, access and delivery (5 February 2020)
¹⁴Home - InsuResilience Global Partnership
¹⁵World Food Programme, Climate Risk Protection for Vulnerable Communities and Countries (November 2023)
¹⁶Inclusive Insurance - Insurance Development Forum (insdevforum.org)
¹⁷AXA Emerging Customers: Business with social impact | AXA
¹⁸Ibid (AXA Emerging Customers: Business with social impact | AXA)
¹⁹https://www.munichre.com/en/solutions/for-industry-clients/parametric-solutions.html
²⁰Deloitte, Climate Change and Insurance: How boards can respond to emerging supervisory expectations (2020)
²¹Climate and weather related disasters surge five-fold over 50 years, but early warnings save lives - WMO report | UN News