Terms of Reference
Assessing the opportunity loss and incentives of the Bangladesh Government for promoting and subsidizing climate risk insurance (non-life such as Flood, Crop, livestock)

1. Background of the assignment
Bangladesh, the largest delta in the world, faces several resilience challenges and suffers from hazards and extreme weather events. Geographical location, land characteristics, the multiplicity of rivers and the monsoon climate render a high vulnerability to natural hazards. Climate change adds a new dimension to Bangladesh by changing the trends of hazard frequency and intensity. Oxfam has been working to build smallholder and landless farmers' resilience through different initiatives one of which is insurance. Evaluations have shown that such initiative have reduced shocks' impacts, increased adaptive capacity and built economic resilience for the women and men. Besides, transferring risks to third parties like insurance companies may help to protect individuals from the loss of income, assets, and livelihoods and facilitate economic growth after the biggest disasters. Moreover, insurance can help ease the government's fiscal burden for disaster prevention and emergency relief and make it more efficient and guaranteed. From our previous experience, we have identified that farmers cannot afford fully the insurance costs, and we believe that it is high time to generate evidence to do advocacy on the government’s role to provide subsidies or support in insurance mechanisms.

Project Description

The Climate Risk Insurance program of Oxfam in Bangladesh has been an innovative response to the needs of climate-vulnerable communities with emphasis on climate change adaptation, economic risk reduction, gender and women’s leadership, disaster risk reduction and rights and entitlement.

In the last three decades, Oxfam has focused on building resilience to Climate Change, especially by strengthening grassroots communities. Oxfam is trying to achieve this by transferring the financial risk prevailing upon the climate-vulnerable communities' shoulders due to frequent disasters. In a continuation of this, Oxfam and its partners have been developing and piloting several parametric insurance products to transfer this financial risk from the communities to the insurance markets.

In this backdrop, Oxfam found a partner, the United Nations World Food Program (UN WFP), to help develop more affordable, accessible and sustainable insurance products and pilot in the Kurigram district of Bangladesh primarily. The district is vulnerable to riverbank erosion, flooding, erratic rainfall and extreme weather events, like cold spells, heat waves and lack of rain. The partnership started in 2019 and is continuing. Parametric flood insurance has been already designed and implemented for 2,000 households in 2020 and 2021. Oxfam has also developed insurance products for other perils like unforeseeable variances in temperature and precipitation which has the potential in causing loss of winter crops and Boro rice. Most work associated with this initiative was conducted between March 2021- and March 2022 that covers nearly 2000 farmers in the Kurigram district.

Oxfam and WFP aim to continue developing and piloting parametric insurance products aligning with the program policy to bring food security and building resilience for the targeted poor and vulnerable community members from the potential losses from catastrophic disasters triggered by climate change. These products is complementing with the other actions such as “Forecast-based Financing” and “Seasonal Livelihoods Programme (SLP)” taken by WFP to support these communities. Forecast-Based Financing (FbF) supports early preparedness to minimize the loss and damages of disasters, and the Seasonal Livelihoods Planning (SLP) assist to enhance the alternate livelihoods options and understanding of the relationship between seasonality and household economy.

The final deadline for the application is 22th May 2022.

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