Summary (English)

Global warming is projected to lower the level and growth of GDP and thus increase poverty, undermining progress towards achievement of the Millennium Development Goals. Within the populations that will be most affected by global warming, the plight of many individuals is linked to the ability of microfinance institutions to adapt to the consequences of climate change. Global warning will create covariate risk on a scale never seen before and microfinance institutions will need to reconfigure their insurance products to deal with its consequences.

Lack of familiarity with potential products and slow adoption of known ones has limited the use of insurance by microfinance institutions. Insurance for themselves and their clients can protect both groups from the worst financial consequences of flood, drought and disease. Insurance could become one of the most important tools in microfinance institutions’ climate change arsenals. At the same time, the increased burdens of disease and death caused by global warming will strain the insurance funds of microfinance institutions. This double edged sword needs to be managed appropriately.