Understanding the role of publicly funded premium subsidies in disaster risk insurance in developing countries

This report explores the role that premium subsidies might play in supporting climate risk insurance products. It finds that, despite some drawbacks, premium subsidies play an effective role in supporting low income households and governments in purchasing insurance products. It shows how a government decision to take out insurance is foremost a question of political priorities, built around the decisions of who to protect and how to protect them. Premium subsidies can influence these decisions. This suggests that premium subsidies may be justified in order to encourage take up of sovereign insurance where there is evidence that countries may otherwise understandably choose not to prioritise paying premiums.


Client
UK Department for International Development
Practice areas