Bangladesh Faces Urgent Need for Climate Risk Insurance to Protect Vulnerable Communities

The threat of climate change looms large over Bangladesh, one of the most climate-vulnerable countries in the world. A new wave of recommendations from experts calls for the government to accelerate the introduction of climate risk insurance (CRI) as a key element of the country’s disaster management and social protection systems. By offering targeted insurance products, experts argue that Bangladesh could shield its most vulnerable communities — especially smallholder farmers — from the devastating economic fallout of climate-related events.

The call for action came at a recent event titled "From Risk to Resilience: Institutionalising Climate Risk Insurance into Bangladesh's Social Protection and Disaster Management Systems," held at The Daily Star Centre in Dhaka. The event, co-organised by the World Food Programme (WFP), Oxfam, and The Daily Star, brought together experts from various fields to discuss the pressing need for a comprehensive climate risk insurance strategy.

At the event, Prof. Suborna Barua, Chairman of the Department of International Business at the University of Dhaka, explained the potential benefits of expanding the insurance market. "If Bangladesh opens the reinsurance market to more private and foreign firms, it will improve competition, enhance service quality, and help drive down the cost of insurance premiums, including for climate risk products," Barua said.

Experts also emphasised the importance of regulatory changes to make climate risk insurance more accessible. These include VAT exemptions for micro-insurance products, adjustments to commission structures, and the development of premium subsidies that would make insurance more affordable for at-risk communities.

Climate risk insurance could be a game-changer for smallholder farmers, who often bear the brunt of extreme weather events. Cyclones, floods, and droughts regularly devastate crops, leaving farmers with no way to recover their losses. Maribeth Black of the WFP pointed out that climate risk insurance could provide farmers with much-needed financial support to recover from such events.

Tarik Ur Rahman, a consultant at Green Delta Insurance, highlighted the importance of using technology to design scalable insurance solutions for vulnerable communities. "Our farmer-centric, tech-driven model can be replicated to help farmers not only in Bangladesh but also globally," Rahman explained.

However, the introduction of climate risk insurance must be handled with care, according to experts. Mohammad Emran Hasan of Oxfam Bangladesh stressed that new insurance products must be carefully designed to avoid burdening vulnerable populations with high premiums.

Imanun Nabi Khan from FAO Bangladesh also underscored the need for accurate data to assess the impact of climate disasters. "During last year’s floods, families who received remittances still faced severe hardships. This shows that simply providing financial aid is not enough. We need precise data and the right technologies to support effective insurance solutions," Khan said.

As the Bangladesh government prepares to address the growing challenges of climate change, officials are exploring ways to support farmers and vulnerable communities through targeted insurance programmes. Md Najmul Alam, Deputy Secretary to the Ministry of Planning, urged development partners to work alongside the government to help subsidise farmers’ insurance premiums, building on the country’s existing subsidy schemes.

The path forward is clear: the government must act quickly to introduce climate risk insurance, ensuring that vulnerable communities are protected from the worsening effects of climate change.