The climate crisis is here, and its impacts are not felt equally. While extreme weather events are increasing in frequency and intensity globally, it is the communities in the Global South— home to the most vulnerable but least responsible for climate change —who bear the brunt of the damage. For UNDP, the question is not to know if a disaster will strike, but how we can help these communities recover faster and build back stronger.

UNDP partners with a broad range of partners to imagine and develop recovery solutions and the insurance sector has emerged as a powerful partner to support this objective. We have talked to CelsiusPro during the Building Bridges Week to understand how the company sees its role in recovery and why they partner with UNDP.

What is Parametric Insurance? Can It Support a Faster, Smarter Safety Net?

At CelsiusPro, we are on a mission to protect communities and businesses in emerging markets from escalating climate risks. The solution we champion is parametric insurance which doesn't work in isolation; it thrives on partnership and innovation. To understand why parametric insurance is so revolutionary, it’s helpful to see how it differs from traditional insurance.

• Traditional Insurance requires a claims process. After a disaster, a policyholder must prove and quantify their losses, often involving loss adjusters. This process can take months, leaving families and businesses in limbo when they need funds the most.
• Parametric Insurance is automatic and objective. Payouts are triggered by a predefined event (e.g., rainfall exceeding 300mm in 24 hours or wind speeds surpassing a certain threshold), based on reliable data from independent sources. There is no need for claims forms or damage assessments. Once the trigger is met, a pre-agreed payout is automatically sent, often within days. 

This speed and simplicity are what make parametric insurance a powerful tool for building resilience where it's needed most.

Why is Parametric Insurance a Cornerstone for Disaster Risk Reduction?

Parametric insurance supports disaster risk reduction in three critical ways:

1. It closes the "Protection Gap" in emerging markets.
Insurance penetration is notoriously low in many developing countries due to a number of economic and structural factors, as well as lack of local insurance ecosystem distribution channels. Parametric products simplify this chain, making it feasible to provide insurance coverage in regions that have traditionally been underserved. Its structure bypasses the need for costly and complex local insurance distribution, allowing us to reach markets where traditional insurance penetration remains low. 

2. It fuels a faster recovery and builds resilience.
For the poor and vulnerable, a slow recovery from a climate shock can mean spiraling deeper into poverty. The rapid cash payout from a parametric policy is a lifeline. It allows families to buy food, repair homes, and restart businesses immediately—without selling off vital assets or taking on crippling debt. This ability to "bounce back" quickly is the very essence of resilience.

3. It incentivizes investment in prevention.
When governments, municipalities, or businesses see the premium for a parametric policy, it starts a crucial conversation about risk. It forces them to ask: "How can we lower this cost?" This naturally leads to discussions about climate adaptation and risk mitigation—investing in better infrastructure, early warning systems, or more resilient agricultural practices before a disaster strikes. Parametric insurance doesn't just pay for losses; it puts a price tag on risk, encouraging proactive investment in a safer future.

Why Does CelsiusPro Consider UNDP as its “Partner of Choice”?

Tackling a challenge of this scale cannot be done alone. It requires a partner with deep local roots, global credibility, and a shared vision. For CelsiusPro, the United Nations Development Programme (UNDP) is that ideal partner.

In the Dominican Republic, we are working with UNDP and a consortium of local and global partners to attach a parametric excess rainfall and wind product to an existing social cash transfer program. When a hurricane hits, this partnership ensures that aid reaches the most vulnerable citizens faster than ever before. The challenge is immense, but together, we are building the safety nets that will protect the most vulnerable for generations to come.

This collaboration is part of the Tripartite Programme, an initiative between UNDP, the German Government, and Insurance Development Forum, where we work together with 19 other insurers, including 3 others based here in Switzerland – Swiss Re, Zurich, Europa Re,  to develop innovative insurance solutions that build countries’ resilience to climate risk around the globe. 

Our collaboration, exemplified by our flagship project in the Dominican Republic, is built on UNDP's unique strengths:

• Unmatched local & global network: UNDP has offices and experts in nearly every developing country. They have the trust of governments and regulators, which is essential for opening doors and creating the regulatory "enabling environment" needed for innovative financial products like parametric insurance to thrive.
• Deep local expertise: Understanding local context is everything. UNDP provides the on-the-ground intelligence and connections to ensure our solutions are tailored to the real needs of the communities we serve.
• Driving the political agenda: UNDP helps advocate for parametric insurance at the highest levels, ensuring that it is recognized as a key tool for climate adaptation and poverty reduction, thereby supporting unlocking public and private funding.

What’s in it for a company like CelsiusPro?

As a company with a strong base in the Swiss insurance environment, we see a dual opportunity in developing parametric products in emerging markets. First, it is driven by purpose. Switzerland has a long history of supporting international development, and we are proud to align with this tradition. Binding our expertise in risk with the goal of reducing poverty gives our work profound meaning.

Second, parametric insurance for the poorest is a business opportunity. The vast protection gap in emerging markets represents the next frontier for the insurance industry. By pioneering and scaling parametric solutions in one region, we can transfer our learnings and products to others, helping to build entirely new markets for resilience. We are proving that doing good and building a sustainable business are not just compatible; they are mutually reinforcing.