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Financial protection against extreme weather losses for the people of St. Lucia


On the Caribbean island of St. Lucia, even people with low incomes will in future be able to insure themselves against weather-related catastrophes. Instigated by the Munich Climate Insurance Initiative (MCII), the new “Livelihood Protection Policy” will make a decisive contribution toward protecting large segments of the populace and thus help them adapt to the negative effects of climate change.

Munich - Hurricanes such as Tomas (2010) and Sandy (2012), which caused dramatic losses in the countries of the Caribbean, underscore the necessity of an effective protection network that guards the populace against the potentially ruinous consequences of extreme weather events. This has become especially relevant since climate change has brought about an increase in the intensity and frequency of such events. Whenever the region is struck by a severe storm, large segments of the populace lose their earnings from agriculture and tourism and thus their livelihoods. “The people affected are consequently often confronted with the threat of long-term poverty because they have to use up their savings or even rely entirely on aid from the government. This typically also reduces their ability to effectively counter future risks”, says Prof. Peter Höppe, Chairman of the Board of the Munich Climate Insurance Initiative (MCII), which leads the project.

The Livelihood Protection Policy (LPP) has the objective of covering the largest losses resulting from heavy rain or high-speed winds so that the people affected can more rapidly repair damage following extreme weather events and recover financially. It is part of the “Climate Risk Adaptation and Insurance in the Caribbean” project, which is subsidised under the International Climate Initiative (ICI) of Germany’s Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The insurance is designed in such a way as to offer incentives for reducing risks. At the same time, the premium is so low that it is affordable for poor people. The payment of benefits is triggered directly whenever a previously specified amount of rainfall or a wind-speed threshold is exceeded. In these cases, each policyholder automatically receives a payment within ten to fourteen days, without having to submit a claim. As an additional benefit, clients are sent short bulletins on their cell phones before the extreme event, supplying them with weather information such as storm warnings and recommendations for reducing losses. Locally, the insurance is being offered by the primary insurer EC Global. Reinsurance is provided by Munich Re.

The initiative is being promoted by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. As Federal Environment Minister Peter Altmaier put it: “The Livelihood Protection Policy represents an innovative solution for effectively protecting low-income segments of the populace against weather risks and helping them in better adapting to the changing weather risks”.

“Climate Risk Adaptation and Insurance in the Caribbean” is a project of the Munich Climate Insurance Initiative (MCII), which consists of insurers, scientists and representatives of non-governmental organisations. The aim of MCII is to develop insurance solutions to protect people in developing countries against the mounting losses caused by weather-related extreme events ( » The project partners also include the Caribbean Catastrophe Risk Insurance Facility (CCRIF), the insurance services provider MicroEnsure, and Munich Re.


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