07 Jul 2022
07 Jul 2022

Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

Marcos Roberto Benso1, Gabriela Chiquito Gesualdo1, Greicelene Jesus Silva1, Luis Miguel Castillo Rápalo1, Fabrício Alonso Richmond Navarro1, Roberto Fray Silva2, and Eduardo Mario Mendiondo1 Marcos Roberto Benso et al.
  • 1University of São Paulo, São Carlos School of Engineering, São Carlos, Brazil
  • 2University of São Paulo, Polytechnic School, São Paulo, Brazil

Abstract. The urgency of accelerating disaster risk resilience also promotes preferred systematic reviews of the methods for design and evaluation of risk transfer tools. This paper aims to provide a state-of-art weather index insurance design, thereby including methods for natural hazards’ indices calculation, vulnerability assessment and risk pricing. We applied the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) using the Scopus database. First, 364 peer-reviewed articles from 2010 to present were screened for a bibliometric analysis and then, the 34 most cited articles from the past five years were systematically analyzed. Our results demonstrate that despite a great research effort on index insurance, the majority of them focused on food insecurity through agricultural and crop insurance. Also, climate change and basis risks were found highly relevant for weather index insurance, but weakly developed, suggesting challenges around food insecurity. Special focus was given to drought hazards, while other hazards such as temperature variation, excessive rainfall and wildfires were slightly covered. Emerging areas, namely agricultural, hydrological, and sustainable index insurance found promissory for insurance. Also, current state-of-the-art lacks methods for incorporating multi-hazard risk evaluation in vulnerability assessment and risk pricing. Most studies considered only single-hazard risk, and the multi-hazard risk studies assumed independence between hazards. Thus, we summarized the most common methods for calculating indices, estimating losses using indices, pricing risks, and evaluating insurance index policies. This review promotes a starting point in weather index insurance design towards a multi-hazard resilient society.

Marcos Roberto Benso et al.

Status: final response (author comments only)

Comment types: AC – author | RC – referee | CC – community | EC – editor | CEC – chief editor | : Report abuse
  • RC1: 'Comment on egusphere-2022-498', Anonymous Referee #1, 26 Jul 2022
    • AC2: 'Reply on RC1', Marcos Roberto Benso, 01 Aug 2022
  • CC1: 'Comment on egusphere-2022-498', Qianjin Dong, 28 Jul 2022
    • AC1: 'Reply on CC1', Marcos Roberto Benso, 01 Aug 2022
  • RC2: 'Comment on egusphere-2022-498', Anonymous Referee #2, 02 Aug 2022
    • AC3: 'Reply on RC2', Marcos Roberto Benso, 17 Aug 2022

Marcos Roberto Benso et al.

Marcos Roberto Benso et al.


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Short summary
Lately we have been exposed to news demonstrating the vulnerability of our society to a variety of natural disasters and they usually are not isolated. To improve the financial stability, we need to provide insurance contracts that allow coverage for multiple sources of threats, such as droughts, extreme temperatures and floods. We conducted a review of the literature for answering very simple questions regarding weather index insurance design and how to cope with multiple hazard risks.