Climate change risk and insurance as an adaptation strategy: An enquiry into the regulatory framework of South Africa and Ghana

Abstract

Climate change and its environmental, social and economic impacts continue to pose sustainability challenges for governments, organizations and individuals around the world. With Africa identified as one of the most vulnerable regions, adaptation to adverse effects of climate change has been recognised as increasingly necessary. Adaptation policies have therefore been developed by most African countries; where some countries have adopted targeted adaptation strategies while others have introduced more general policy initiatives. Insurance is a vital part of a comprehensive set of responses targeted at adapting to future climate change. Insurance, as argued, can provide resources needed to rebuild societies after experiencing adverse effects of extreme weather events, and can do so in ways that promote preventive, risk-reducing action. However, the extent of involvement of the insurance sector and adoption of climate insurance policies depends on the national regulatory frameworks governing adaptation. With a particular focus on South Africa and Ghana, this chapter links climate change risk to the potential of insurance as an adaptation strategy. It then interrogates the extent to which the regulatory environment can be harnessed in support of insurance as a climate change adaptation strategy in South Africa and Ghana.