The Caribbean: Financial Literacy

Insurance – though no panacea for climate change-related extreme weather events – can serve as a measure for adaptation of vulnerable populations to climate change. People that are especially vulnerable to climate change predominantly rely on traditional coping mechanisms, such as the use of savings. However, these traditional measures are often insufficient and can lead to a negative impact on their overall resilience in the long term. Insurance could serve as one measure to cover losses occurring from an extreme weather event but the vulnerable population are often not familiar with insurance or might have made bad experiences with insurance companies and/or too complex products before.
Challenges related to this objective are:
  1. Overall lack of understanding of index insurance among most stakeholders.
  2. Widespread lack of trust in traditional insurance companies among the population.
  3. Lack of investigation and research with respect to financial risk management products and insurance in the country.
  4. Uncertainties in the decisions of the United Nations Framework Convention on Climate Change (UNFCCC)  Caribbean related to insurance over the course of the project.