Climate and Disaster Risk Finance and Insurance (CDRFI) promises substantial resilience benefits. Yet, due to affordability challenges as well as market inefficiencies, to date they are not used to the extent they could. Limited uptake, in turn, threatens the sustainability of their supply. In the wake of fiscal pressures that were exacerbated by the Covid-19 pandemic, the topic of premium financing as a means to financially support CDRFI solutions and address the affordability challenge is gaining importance.
In this context, the effectiveness of financial support for CDRFI could be improved by a coordinated, principled approach to premium financing. For this, there is a need to overcome the lack of awareness and evidence-based guidance on the conditions under which affordability and sustainability concerns for insurance solutions in vulnerable countries are best addressed through – inter alia – premium financing or other forms of concessional finance.