Mitigating Disaster Risks: Exploring Regulatory Frameworks for Sustainable Insurance Practices

Abstract

Background: The increasing frequency and severity of natural disasters pose significant economic and social challenges, particularly in regions vulnerable to climate change. Sustainable insurance practices, supported by robust regulatory frameworks, play a critical role in mitigating disaster risks and fostering resilience among affected communities.

Objective: This study investigates regulatory frameworks for sustainable insurance practices in disaster-prone regions. It aims to identify best practices and propose legal reforms to enhance disaster risk management through insurance mechanisms.

Methodology: A case study approach was adopted, focusing on disaster risk management policies in Mozambique, Tanzania, and Madagascar. Data was collected through interviews with policymakers, insurers, and community representatives, as well as an analysis of regional legal documents, insurance policies, and disaster management reports from 2010 to 2024. The study evaluates the integration of disaster risk reduction strategies within insurance regulations.

Findings: The findings reveal that while Mozambique has implemented a disaster insurance pool to address cyclone risks, the regulatory frameworks in Tanzania and Madagascar lack comprehensive strategies for disaster risk transfer. Challenges include inadequate enforcement of existing laws, low insurance penetration, and limited public awareness. The study recommends creating regional insurance risk pools, incentivizing sustainable insurance practices, and incorporating climate risk assessments into policy frameworks to enhance resilience.