Climate change complexity and unpredictability have made adaptation finance both difficult to scale and sustain – particularly across the Global South. Traditional financing approaches face significant barriers including limited local capacity, difficulty quantifying adaptation benefits, mismatched investment horizons (private investors seeking shorter-time returns vs adaptation projects generating benefits over decades), underestimation of climate risks, and fragmented finance systems. Building on previous T20 climate finance recommendations, this policy brief argues that leveraging the insurance sector’s expertise can unlock more resilient and scalable adaptation financing solutions, aligning with broader G20 objectives for sustainable and inclusive growth.

Insurance expertise offers transformative solutions by improving access to climate risk data, enhancing risk understanding, pooling and transferring risks, incentivising resilience measures, and building local capacity. These elements directly support the G20’s sustainable finance agenda and connect to ongoing climate dialogues under the Brazilian G20 presidency, forming a basis for South Africa’s 2025 leadership and future UNFCCC negotiations.

To scale up adaptation finance, we propose the following recommendations:

1. Mandate standardised risk assessments via multilateral development banks (MDBs): Develop a G20-endorsed climate risk “scorecard” requirement for adaptation finance projects, implemented by MDBs to enhance transparency and investor confidence.
2. Enhance capacity building through insurance-sector expertise: Partner insurance firms with local stakeholders to provide training in risk modelling and project design, addressing capacity gaps in the Global South.
3. Scale parametric insurance for timely climate response: Expand parametric insurance mechanisms that trigger swift payouts when climate thresholds are met, reducing financial volatility post-disaster.
4. Provide financial incentives for investing in adaptation: Reward investments in resilience through financially material factors such as credit ratings, cost of capital, and insurance premiums.
5. Utilise sustainability-linked financial instruments and blended finance: Increase private investment through greater transparency about risks and returns using labelled bonds and other financial instruments.
6. Strengthen central bank frameworks for climate risk insurance markets: Leverage G20 central banks’ regulatory authority to create enabling environments for insurance-based adaptation finance through prudential frameworks, liquidity facilities, and cross-border market facilitation.

These measures will promote long-term resilience by mitigating climate risks, attracting diverse funding sources, and strengthening community preparedness. By integrating insurance-based strategies into broader development frameworks, G20 members can champion a resilient future and encourage global best practices, ultimately ensuring that climate adaptation finance is both scalable and sustainable.