Loss and damage fund
International financial mechanism intended to help vulnerable countries cope with irreversible climate damage.
The loss and damage fund is an international financial mechanism, formalized at the COP27 climate negotiations then operationalized from COP28, intended to help the most vulnerable countries cope with the irreversible loss and damage caused by climate change, that is, the damage that neither mitigation nor adaptation prevented. It answers a long-standing demand from developing countries, grounded in the historical responsibility of major emitters. For the insurance sector, this fund intersects risk-transfer expertise: parametric instruments, regional pooling facilities and catastrophe bonds can serve as operational vectors, turning public financing into rapidly triggerable cover. Attribution science feeds the debate on measuring climate-attributable damage. The fund illustrates the emerging articulation between public climate finance and private insurance techniques.
Hypothetical case: a parametric regional facility funded by the loss and damage fund, agreed at COP27 in Sharm el-Sheikh in November 2022, could quickly pay indemnities to an island state after a major cyclone.
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