Record-breaking heatwave... Heatstroke and livestock damage highlight 'Heatwave Insurance'

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As the Earth's average temperature gradually rises, damage caused by heatwaves is increasing. Accordingly, the need for insurance products that compensate for personal heatstroke as well as damages at construction sites and rural areas is also growing.

According to the Korea Insurance Research Institute on the 5th, there is an analysis that insurance responding to heatwave damage is becoming more necessary as the Earth's average temperature rises. This is because the Earth's temperature has increased by about 1.2 degrees Celsius (℃) compared to the late 19th century average, resulting in increased physical damage caused by heatwaves.

According to a joint report by the United Nations and the Red Cross, more than 70,000 people died from 38 heatwaves that struck the world between 2010 and 2019. It warned that if the Earth's temperature rises by 2℃, the incidence of heatwaves will increase 14-fold. The International Labour Organization (ILO) estimated that by 2030, the working hours available to agricultural workers will decrease to 40% of the current level due to heatwaves. By 2045, three-quarters of global food production is expected to face a crisis due to heatwaves.

Insurance companies are also launching various products in preparation for this. In Japan, Sumitomo Life Insurance launched the industry's first heatstroke-specialized insurance in April last year. At the end of June last year, when temperatures rose sharply, more than 6,000 heatstroke insurance contracts were signed for three consecutive days starting from the 29th of the same month. Sompo Japan expanded its heatstroke hospitalization and death accident insurance rider from under 23 years old to all ages starting from July last month.

[Image source=Yonhap News]

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In India, where temperatures soared above 49℃ in some areas last year and the incidence of heatwaves increased about 30 times, a 'parametric insurance' was launched targeting low-income female day laborers who cannot work. Parametric insurance is a product that determines insurance payouts based on predefined objective indicators. When the conditions set at the time of the insurance contract are met, the insurance payout is automatically made. Indicators related to weather, earthquakes, floods, etc., are mainly used.

Since May, the Rockefeller Foundation has partnered with the microinsurance startup 'Blue Marble' and the Indian Women Workers' Union to introduce parametric insurance that compensates for income loss if a heatwave lasting more than three days above the average temperature occurs. The target includes 21,000 members of the Indian women workers' union from various occupations such as salt farms, waste recycling, street vendors, farmers, construction, and shipping. When the insurance payout criteria are met, $3, equivalent to a daily wage, is automatically paid. Multiple compensations can be received during heatwave periods. There are plans to expand the insurance coverage area to the entire country of India in the future.

In Korea, insurance products to prepare for natural disasters such as heatwaves have also been launched. Representative products include crop disaster insurance, livestock disaster insurance, and aquaculture disaster insurance sold by Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance, Meritz Fire & Marine Insurance, and NH Nonghyup Property & Casualty Insurance, targeting farmers, fishermen, and livestock industry workers. Especially during recent heatwaves, it is necessary to add heatwave disaster coverage riders.

There are also 'mini insurance' products for individuals. Samsung Fire & Marine Insurance launched the 'Seasonal Customized Mini Insurance' on the 24th of last month, which covers specialized risks suitable for each season. This summer, it covers heat-related illnesses, hyperbaric oxygen therapy costs for decompression sickness, drowning death, toxic animal contact poisoning diagnosis fees, and emergency medical anaphylaxis diagnosis fees. The monthly premium is about 10,000 KRW and can be subscribed on a daily basis.

Yoonji Kang, a research fellow at the Korea Insurance Research Institute, explained, "The need for insurance that can respond to heatwave damage is increasing," adding, "Insurance companies need to provide products to address the increasingly frequent climate risks to reduce social and economic risks."

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