The Insurance Sector as an Instrument for Climate Risk Mitigation in Brazil (Contribuciones a las Ciencias Sociales)

Summary

• Extreme weather events like heatwaves occur three times more frequently globally than during the pre-industrial era.p.3
• Climate change is projected to push 132 million individuals into extreme poverty by 2030 due to material damage and loss of productive capacity.p.3
• Natural disasters generated US$ 6,4 bilhões in economic losses in Brazil between January and September 2024.p.4
• Rural insurance coverage remains highly limited in Brazil, covering only 8% of the national cultivated area under the PSR program.p.7
• The UK's Flood Re scheme reduced average flood insurance premiums for affected policyholders from around £ 4.400 to approximately £ 1.100 by December 2024.p.14
• Mexico's catastrophe bond structure provided US$ 60 milhões in immediate liquidity following Hurricane Otis in October 2023.p.15

Key insights

1. Global heatwaves occur three times more frequently today than in the pre-industrial period.p.3
2. Economic losses from natural disaster events in Brazil reached US$ 6,4 bilhões over the first nine months of 2024.p.4
3. Agricultural insurance coverage in Brazil covers only 8% of the total cultivated land area.p.7
4. SUSEP Circular 666/2022 established mandatory ESG sustainability integration into Brazilian insurance underwriting and investment risk management.p.7
5. The UK Flood Re program lowered average residential flood policy premiums for claim-affected households from £ 4.400 down to £ 1.100.p.14
6. Mexico transferred climate catastrophe exposure directly to capital markets using IBRD risk capital notes to secure rapid disaster recovery funding.p.15