When construction sites stop because of a heat wave, a day laborer's daily income disappears. Insurance that offsets losses caused by extreme weather like this is "climate insurance." Because the agreed payout is made when a weather index reaches a preset threshold, there is no need to prove each loss as with indemnity claims.
The Ministry of Climate, Energy and Environment is pushing to introduce climate insurance nationwide. By leveraging the characteristics of insurance, the government can provide income and health safety nets against the climate crisis to day laborers and vulnerable groups who have difficulty accessing medical services.
The government plans to prioritize low-income people, outdoor workers, and those in farming and fishing, while reviewing ways to expand coverage to the private sector, including renewable energy power producers. In Korea, Gyeonggi Province and Jeju Province introduced climate insurance first, and the government plans to use that as a basis to design a nationwide model.
◇ Gyeonggi: "health safety net for all residents"… Jeju: "income protection for construction day laborers"
Gyeonggi Province in April last year became the first in the country to introduce climate insurance that automatically enrolls all 14.4 million residents. The province covers the entire premium, and up to 200,000 won is paid upon diagnosis of climate-related illnesses such as heat- and cold-related diseases and malaria. In its first year, it supported more than 51,000 cases and has gained popularity. Recently, it added new benefits, including 3 million won in condolence money for climate disaster deaths and 100,000 won for emergency room visits.
Jeju Province in April introduced "construction site climate insurance" that compensates public construction day laborers for income losses when outdoor work is halted due to heat waves and other factors. While Gyeonggi's model is a universal health safety net, Jeju's is an index-based structure focused on income loss for a specific occupation. Of the total project budget of 1 billion won, Jeju bears 100 million won, and the remaining 900 million won is covered by the insurance industry's mutual growth fund.
Overseas, climate insurance that offsets heat wave damage has taken root under private leadership. In India, the United Kingdom, and Canada, products operate that pay a daily wage when a heat wave occurs. In Japan, Sompo Japan went a step further by expanding coverage to solar power operators. If the monthly cumulative sunshine duration falls below 85% of the average, the policy immediately compensates for revenue losses.
A ministry official said, "For vulnerable groups, we are reviewing ways to strengthen matched support from national and local budgets, and for renewable energy power producers, to diversify the insurance spectrum by using private funds."