Integrating insurance design and resilience metrics for climate-disrupted infrastructure delivery: A conceptual framework

This paper is based on the argument that insurance and surety mechanisms can be more actively involved in funding and motivating resilience in the context of disrupted infrastructure delivery in climate disruptions. Instead of serving merely as tool of risk dispersion, insurance and surety design can be designed in a strategic manner with quantifiable resilience measures to facilitate reduction of risks, enhance incentive, and contribute to increased project continuity outcomes. To combine these functions, a well-structured framework is needed which links measures of resilience with insurance and surety terms in a manner which is transparent and operational.

In this respect, this paper proposes a conceptual framework of insurance-based resilience financing in construction and infrastructure projects disrupted by climate. The framework particularly identifies the exposure to hazards, vital infrastructure and the mitigation measures to insurance policy coverage, deductibles, and sureties. By ensuring that the financial protection measures and the resilience actions that are displayed are aligned, the framework will reduce the magnitude of losses, accelerate the claims processes, reduce confrontations, and improve the rapid restoration of the vital infrastructure services in case of a climate inference.

This paper has threefold input. It begins by providing an analytical assessment of the existing interaction between infrastructure programmes and hazard information with insurance coverage underwriting practices on areas of greatest misfit, and how these work against the creation of resilience. Second, it presents a new conceptual scheme that combines risk transfer and reduction that incorporates quantifiable risk reduction and reduction machineries that are contractually entrenched. Third, it demonstrates the relevance of the framework in practice by providing real-life scenarios of disruption and advice on future contracts and governance implementation. Therefore, concerns of relevance in the paper are directly linked to enhance demand on policy-based and financially grounded resilience in infrastructure delivery among climate-exposed infrastructures.