The Era of Climate Crisis Damage Covered by Insurance is Coming

[Financial News] The National Planning Committee is expected to adopt the introduction of 'climate insurance' as a national agenda. This is to support the so-called 'climate vulnerable groups', such as outdoor workers who face economic difficulties when work is halted due to heatwaves or small business owners whose sales decline.
Climate insurance is expected to be created in an index-based form. Index-based insurance provides quick compensation without a separate loss assessment process when objective criteria such as weather indicators are met, making it effective in minimizing damage to vulnerable groups and helping stabilize their livelihoods.
According to the government and the National Planning Committee on the 22nd, the Climate Energy Task Force (TF) within the National Planning Committee is discussing the adoption of climate insurance as a national agenda. It is reported that the adoption of the national agenda is likely.
The National Planning Committee is discussing the introduction of climate insurance, focusing on index-based insurance and local government insurance.
Index-based insurance is being reviewed by the authorities with the goal of introduction in 2026 after a pilot project by the Ministry of Environment next year. They are developing an index-based insurance form that guarantees income if outdoor workers cannot work due to heatwaves. Previously, the Ministry of Environment and the General Insurance Association signed a business agreement for the introduction and activation of climate insurance last April.
The insurance industry expects that index-based insurance targeting various climate crisis vulnerable groups, such as delivery workers, small business owners whose sales decrease during heatwaves, and elderly living alone, will emerge in the future.
An insurance industry official said, "Various forms of index-based insurance are already being sold overseas in countries like the United States and Japan. Policy support for introduction is needed domestically," adding, "Since the damage caused by climate change may be difficult to directly verify causally, climate insurance should be created in an index-based form." He also noted, "Climate insurance can play a role in reducing financial risks due to climate change."
In terms of welfare, the climate insurance proposed by Gyeonggi-do is also known to be under discussion. Gyeonggi-do implemented climate insurance for the first time nationwide in April this year. Gyeonggi-do covers the entire insurance premium, and all residents can automatically receive benefits without any separate procedures. Specifically, it provides fixed amounts for △diagnosis fees for heat-related illnesses and cold-related illnesses △diagnosis fees for infectious diseases △10,000 to 30,000 won in accident consolation money for injuries related to weather warnings lasting more than four weeks.
As of the 20th of this month, a total of 78 people have been identified to have benefited from Gyeonggi-do's climate insurance. Cases such as outdoor workers who collapsed while working at construction sites during heatwaves, farmers who visited emergency rooms after working in fields, elderly people who collapsed during senior job projects, and children who suffered from heat during outdoor activities have been applied and received.
Additionally, climate vulnerable groups are selected as targets for the health management project at public health centers, providing additional support for transportation costs, transfer, and mental damage. As the first case, 'medical institution transportation cost' of 20,000 won was paid to an 80-year-old resident in Seongnam. A Gyeonggi-do official said, "We have requested the National Planning Committee for nationwide expansion of climate insurance and national funding support."
coddy@fnnews.com Ye Byeong-jeong Lee Yu-beom Reporter