Critics of the insurance, say that such insurance places the bulk of the economic burden on communities responsible for the least amount ofcarbon emissions.[5] For low-income countries, these insurance programmes can be expensive due to the high start-up costs and infrastructure requirements for the data collection.[7] It is theorised that high-premiums in high risk areas experiencing increased climate threats, would discourage settlement in those areas.[1] These programmes are also usually timely and financially inadequate, which could be an uncertainty to national budgets.[7] A considerable problem on a micro-level is that weather-related disasters usually affect whole regions or communities at the same time, resulting in a large number of claims simultaneously.[8] This means that it is needed to be sold on a very large, diversified scale.[8] However a well-designed climate risk insurance can act as a safety net for countries while improving resilience.[6][9]
The rising climate change related risks, such assea level rise, floods and windstorms, threaten the livability and affordability of the impacted areas.[11] This is why one of the more widely used forms of climate risk insurance isflood insurance, which provides coverage against loss caused byflooding.[11]
