The Caribbean island of Jamaica has launched the “Livelihood Protection Policy (LPP)” – an innovative insurance product to protect low-income people against extreme weather risks. Jamaica becomes the second country in the region – following Saint Lucia – to offer this new product, which was developed by the “Climate Risk Adaptation and Insurance in the Caribbean” project.
Recent events such as Hurricane Sandy last year, which affected Jamaica and other countries in the Caribbean, highlight the need for a safety net to protect vulnerable people engaged in sectors such as agriculture and tourism, which tend to be most affected by extreme weather events. “Due to difficult economic conditions, national budgets across the region are tight and are having increasing difficulty in accommodating growing expenditures for recovery after natural hazards. The LPP policy transfers some of the risks into the insurance market and thus providing relief for the national budgets”, stated Prof. Peter Hoeppe, Chairman of the Munich Climate Insurance Initiative (MCII) who leads the project.
Like other people in the Caribbean, Jamaicans fully appreciate the value of preparing for natural hazards by taking proactive measures before these events occur. While these islands have always been vulnerable to hurricanes and storms, the effects of those events are anticipated to worsen due to expected intensification of such storms caused by global warming. In fact, Jamaica participated in a study which demonstrated this – in 2010, a study of the Economics of Climate Adaptation in the Caribbean was conducted in eight Caribbean countries with funding support from the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The study found that annual expected losses from wind, storm surge and inland flooding currently amount to 6% of Jamaica’s GDP and that, in a worst case scenario, climate change has the potential to increase these expected losses to 9% of the country’s GDP by 2030. Therefore, it is clear that individuals need to take personal measures to reduce the impacts on their own livelihoods. The LPP will help Jamaicans to do this.
The LPP aims to protect low-income earners, including small-holder farmers as well as day labourers in other sectors, with the intention to cover losses to people’s livelihoods caused by heavy rainfall and high winds. It enables affected people to recover more quickly after a damaging weather event. For example, farmers who have purchased the insurance cover will potentially have a source of immediate funding to enable them to undertake activities such as replanting, draining fields and reconstructing irrigation systems – enabling them to get back on their feet and realising concrete earnings as soon as possible. One Saint Lucian banana farmer, who has purchased ten policies, said “I don’t want a hurricane, but if one comes, I appreciate that I will get something to help.”