As climate change makes the world hotter, the poorest workers in the world might benefit from coverage.
By April near Ahmedabad, India, temperatures had already reached 100ºF, an extreme being linked to trends relating to climate change, and one against which heat insurance has the potential to protect affected workers.
Everyone from physical laborers to people selling products affected by heat could potentially benefit.
Last year, temperatures there reached 114.8ºF, at a peak becoming increasingly commonplace, as 2016’s peak was an even higher 118ºF. That location is far from the only one experiencing such record highs. Unlike in the United States, where extreme temperatures are already wreaking havoc in the form of droughts and increasingly frequent and damaging storms, in many parts of the world, air conditioning is next to non-existent.
There is nothing to protect workers and the products of small businesses from the harm from such extreme temperatures except taking time off – something that most cannot afford, as they are already living well below the poverty line.
That said, heat insurance is starting to become a product within reach of poor workers in certain parts of the globe, as insurers develop policies to serve these new risks. In this case, according to a recent Reuters report, a nonprofit called Arsht-Rock Foundation Resilience Center has partnered with a microinsurance startup, Blue Marble, as well as a trade union.
Heat insurance pays workers who take time off when temperatures rise above certain extreme levels.
This type of coverage provides workers with the opportunity to receive compensation for lost income that can occur when temperatures rise above historical averages and stay there for at least three days.
Though traditional “parametric” business coverage can take months to pay because losses must be proven, this new type of policy automatically kicks in if a predetermined temperature threshold’s conditions have been met. Payments can be set for anything from temperatures to rainfall levels or even wind speeds.
The developing world has the potential to benefit from the assistance offered through heat insurance payouts as they are the most vulnerable to climate change’s worsening heat waves, droughts and storms.