Insurance is a key economic instrument in the context of DRR, offering a shift in the mobilisation of financial resources away from ad hoc post-event payments, where funding is often unpredictable and delayed, toward more strategic and, in many cases, more efficient approaches that were arranged in advance of disastrous events. The main function of insurance is the financial transfer of risks and compensation for losses. However, if correctly designed and implemented, it can also support disaster risk reduction (DRR) and climate adaptation. Within this context, insurance may be delivered using a range of approaches, such as risk pools, private insurance, or public insurance schemes, addressing different hazards at different scales, including property, agriculture, and sovereign risk insurance. Feasibility, effectiveness, and the potential for incentivising behavioural change vary across the different types and forms of insurance. Methodologies for comparing and assessing these characteristics are currently starting to emerge.

Based on the case studies, our analysis reveals a range of important insights that are relevant to individuals who consider, design, operate, or participate in insurance schemes. An area of particular interest is the role of MSPs for the provision of disaster insurance. Here, our case studies (Figure 5.1) highlight the importance of increased evidence and understanding of underlying risk issues, enhanced collaboration of stakeholders, and openness about limitations and costs. The issue spans many dimensions, which makes innovation and reform challenging for political decision-makers and private companies.