Flooding, homes and loss: insurance as a risk-transfer mechanism in Vietnam

As climate change threatens low-income communities with intensified environmental risks, the need to provide mechanisms to help low-income households cope with these risks grows. In Vietnam’s deltas, low-income communities are at high risk of flooding that can cause catastrophic damage and high associated costs. Many households have to pay for materials and labour when preparing for and recovering from floods and this can represent a significant portion of their annual income. One mechanism to help communities cope with the costs of intensifying floods is index-based insurance. In a recent study, 66 per cent of respondents expressed an interest in such a scheme. Households in heavily flooded areas are especially interested in government-supplied insurance. This suggests that there is a clear role for government involvement in index-based insurance, ranging from promoting flood preparations for reduced vulnerability to providing the risk-transfer mechanism itself.

Available at http://pubs.iied.org/10729IIED.html?c=urban

Further reading:

Danh, V T (2014), “Household economic losses of urban flooding: Case study of Can Tho City, Vietnam”, Asian Cities Climate Resilience Working Paper Series 12, International Institute for Environment and Development, London, available at http://pubs.iied.org/10715IIED.htm.

Tinh, B D and N M Hung (2014), “Modelling demand for catastrophic flood index-based insurance in Da Nang City, Vietnam: Using choice experiments”, Asian Cities Climate Resilience Working Paper Series 10, International Institute for Environment and Development, London, available at http://pubs.iied.org/10706IIED.html.