For too long, the worlds of disaster risk reduction, anticipatory action, and insurance have operated in parallel, sharing the vocabulary of resilience but rarely speaking the same language. Risk reduction practitioners build flood barriers and drought-tolerant seed systems. Insurers model loss probabilities and price premiums. Humanitarian actors pre-position supplies and issue early warnings. Each domain does important work. But when the storm hits, the most vulnerable communities still fall through the gaps between them.
That must change. And evidence from the ground—from the Pacific Islands to Cuba's cooperative farms—suggests that change is possible.
Risk reduction as a driver of insurability
One of the most important conceptual shifts emerging from recent practice is the recognition that risk reduction does not just benefit from insurance, but actively enables and strengthens it. When communities reduce their exposure and vulnerability, they become more insurable. When insurers price that reduction into their models, they create a financial incentive for communities to invest in resilience. This is not a theoretical loop. It is being demonstrated in practice.
WFP's +Resiliente project in Cuba offers a compelling example. Working with agricultural cooperatives, the program developed a vulnerability index using 28 indicators, covering soil management, water use, crop diversity, livestock practices, and food availability to assess farmers' risk profiles. Farmers who adopted disaster risk reduction (DRR) measures and were verified as less vulnerable were rewarded with lower insurance premiums. According to WFP’s internal impact studies of the intervention, within two years, 80% of participating farmers had reduced their vulnerability scores, and crop losses fell from 15% to 7%. Perhaps most strikingly, 29 women from 11 municipalities were trained as licensed insurance agents, embedding financial protection services directly in the communities they serve and ensuring the people closest to the risk were also closest to the solution.
This is what it looks like when risk reduction and insurance reinforce each other rather than operate in parallel. The insurance product created an incentive to invest in resilience, which made the insurance product more viable. And, crucially, the community was at the center of both.
This is what it looks like when risk reduction and insurance reinforce each other rather than operate in parallel. The insurance product created an incentive to invest in resilience, which made the insurance product more viable. And, crucially, the community was at the center of both. This model challenges the traditional insurance logic that risk is a given to be priced around. Instead, it treats risk as a variable that structured finance can actively help to reduce.
Anticipatory action: From humanitarian tool to insurance architecture
Anticipatory action (AA), the practice of releasing pre-arranged resources—based on forecast triggers and pre-agreed plans—before disaster strikes, has long been the domain of humanitarian organizations. WFP has delivered anticipatory cash transfers and early warning messages to millions of people ahead of droughts, floods, and cyclones. In 2025, WFP protected more than 6.3 million people across 47 countries with its AA work. Anticipatory action was activated in 14 countries, including Afghanistan, Bangladesh, Cuba, Ecuador, Ethiopia, Guatemala, Haiti, Kenya, Malawi, Mozambique, Niger, Nigeria, Peru and the Philippines. In the same year, more than USD 35 million was released ahead of forecasted floods, droughts and cyclones, allowing 1.23 million people to receive anticipatory assistance and 15.7 million people to receive early warning information before shocks strike.
The evidence on the returns to AA is striking. Studies cited across multiple programs suggest that every USD 1 invested in anticipatory action can generate up to USD 7 in savings by preventing loss and avoiding the more expensive cycle of emergency response and reconstruction.
What is newer, and more significant, is the integration of AA into insurance architecture itself. Forecast index insurance (FII) represents one such evolution. Rather than waiting for losses to be verified after a disaster, FII triggers payouts based on probabilistic forecasts. This means resources reach communities in time to act — e.g., to move livestock, reinforce structures, purchase inputs — rather than arriving after the damage is done.
The UNCDF-led Pacific Insurance and Climate Adaptation Programme has operationalized this approach in Fiji, where payouts of up to 20% of the insured sum are released 48 to 72 hours before a cyclone makes landfall, based on meteorological forecast data. The remaining 80% follows after the event, based on verified track data. The program has expanded from four communities in Fiji in 2023 to twelve in 2024, with Samoa and the Solomon Islands following
What makes these models significant is not just the technical innovation, but the deliberate attention to who can actually access and afford them. Premium financing through installment arrangements aligned with seasonal income cycles addresses affordability directly. The parametric design, using observable triggers rather than loss adjustment, removes the information asymmetries that have historically made smallholder and community-level insurance so difficult to scale. And by working through well-structured cooperatives with existing community relationships, the programs ensure that insurance is embedded in trusted social structures rather than imposed from outside. That is not merely good design. It is what determines whether a product reaches the people who need it most or stops short of them.
Community is not the last mile: It is the first mile
What connects Cuba and the Pacific is a common reframing of where protection begins. Community-level action is not the implementation tail of a sovereign strategy. It is the foundation upon which everything else must be built.
In Cuba, those 29 women insurance agents are not a footnote to the program, but the driving force behind its success. In the Pacific, cooperatives are not simply the distribution channel, but the design partners, providing demand-side feedback that shapes the product before it is launched. In both cases, the people closest to the risk are closest to the solution.
This matters for the insurability debate. A community that understands its risk, has invested in reducing it, and has access to financial products that respond before disaster strikes is a categorically different risk profile than one that has been excluded from all three of those dimensions. Insurability is not a fixed attribute — it is something that can be built, and communities are the primary site of that construction.
The silo problem, where risk reduction practitioners, insurers, and humanitarian actors operate on separate tracks, is not just an organizational inconvenience. It is a structural reason why protection gaps persist. When DRR happens without insurance, communities reduce risk but remain financially exposed. When insurance is sold without DRR, premiums rise to reflect unmanaged risk and communities cannot afford coverage. When anticipatory action operates without links to either, it remains a humanitarian intervention rather than a systemic change.
Breaking those silos requires new product designs, new funding architectures, and new institutional relationships. But it also requires a shift in how the question is framed. The question is not "what risks can be insured?" It is "what would it take to make the people most exposed to climate risk genuinely insurable?" The answer involves risk reduction, anticipatory action, community engagement, government systems, and financial innovation working together, not in isolation.
This shift is becoming critical as the climate crisis intensifies. As losses grow, the insurance industry cannot remain viable through risk transfer alone. Its long-term affordability and sustainability will depend on reducing underlying risks and building resilience. Insurance must evolve from simply paying claims after disasters to actively promoting risk reduction, climate adaptation, anticipatory action, and resilience-building investments. The future of inclusive insurance is not just about expanding coverage—it is about creating and sustaining insurability in a rapidly changing climate.
The evidence from Cuba and Fiji suggests the answer is within reach. What is needed now is the will to act on it at scale.
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