Disaster Risk Reduction through innovative insurance solutions

The HuT (The Human-Tech Nexus) project aims at finding effective strategies to manage the risks associated with extreme climate events by means of specific demonstrators over the European territory in which different Disaster Risk Reduction strategies are prototyped and tested. In this context, we show here two distinct innovative insurance prototypes to cope with risks associated with wildfires and landslides over two peculiar areas in Sardinia and Campania regions (Italy). While the hazard posed by the two perils show distinct characteristics and origins, in both cases an insurance product can play a crucial role in the aftermath of the events for communities and private stakeholders. Since the risk assessment is crucial both in terms of financial structure and pricing strategies of a natural hazard insurance product, prototypes are developed through a Nat Cat modeling-based hazard assessment, while the vulnerability and finance considerations are related to the specific characteristics of the area of interest. Eventually, two prototypes are fully developed: “Landslide First Rescue”, a semi-parametric product designed to cope with the immediate economic needs after a landslide events; and “Fire Safe Community”, proposed as a community-based efficient tools to restore the economic losses related to wildfires. The prototypes present specific discounts if the policy holders are willing to implement risk reduction solutions to cope with the specific natural hazard. Results prove that the final premium associated with the products would be affordable and several consultations with interested stakeholders have shown how these kinds of products could also play a role in the development of nature-based solutions over broader regions.