Leveraging insurance for anticipatory action: insights and emerging lessons

Despite its proven benefits, anticipatory action remains chronically underfunded, undermining its ability to reach its full potential. As such, new financing mechanisms are required. Several disaster risk financing tools, such as insurance, catastrophe bonds and crisis modifiers, use data-informed triggers that are similar to those used in anticipatory action, making them well suited to support this approach. Together, these tools could form the financial backbone of anticipatory action and support its transition to a large-scale, systemic approach for reducing disaster risks.

This working paper examines six case studies of this integration, exploring the lessons learned and identifying opportunities for improvement. Using a comparative case study methodology, it aims to: 

• examine how insurance instruments have been adapted to incorporate anticipatory action principles
• identify and analyse key challenges, including technical, financial and operational hurdles
• illustrate solutions that have been developed
• highlight persisting gaps and propose pathways to refine and scale up catastrophe-risk-insurance instruments for broader anticipatory action applications.