26 O Hasu and T-K Lehtonen
Aguiton 2019; 2020; Bridge et al. 2020; Christophers et al. 2020; Collier &
Cox 2021; Collier et al. 2021; Elliott 2021; Gray 2021; Grove 2021; Johnson
2013; 2021; Lehtonen 2017; Lucas & Booth 2020; Taylor 2020). These studies
make it evident how widely shared, among both public and private actors, is
the understanding that insurance technology is an obligatory passage point
for translating large-scale environmental hazards into actionable issues.
Research shows that, in fact, relevant financial technologies come in many
forms, that their use can be highly context specific, and that they can be
contested for good reasons. Nevertheless, what remains constant across
the field is the perception that the changing risks generated by climate
change create threats and opportunities for the industry; climate change
is at the core of present-day discussions on insurance and weather-related
catastrophes.
This chapter is based on a close reading of the World Bank Global Index
Insurance Facility (GIIF) document: Risk Modeling for Appraising Named
Peril Index Insurance Products: A Guide for Practitioners (RM below;
Mapfumo et al. 2017). The project articulates its general aims as follows:
‘GIIF’s objectives are to provide access to financing for the vulnerable; to
strengthen the financial resilience of the poor against the impact of climate
change and natural disasters, and to sustain food production for local communities and larger markets.’ Within GIIF, RM has been used for workshops and course material, such as Emerging Guidelines for Underwriting
and Portfolio Management. We concentrate our analysis on RM because of
the document’s programmatic and authoritative nature. What makes the
text especially interesting is how it provides normative guidelines for putting together and employing index insurance and presents arguments about
how to use – and not use – the multiplicity of environmental data to design
mechanisms of socioeconomic coordination.
We read RM to examine three themes that it unveils. First, we scrutinise
the practical means through which the soil is transformed into the index,
an abstract object of calculation. The soil itself is a complex entity that is
comprised of myriad living beings, processes, and interactions with weather
conditions and human intervention. The index performs a selection of the
soil’s elements in a process mediated by satellite technologies, information
infrastructures, and forms of modelling.
Second, we analyse why and how the index is used. It is revealed to be a
technology that transforms local uncertainties regarding the soil, weather
dynamics, and yield into financial objects. Index insurance creates a specific kind of orientation to caring for future uncertainties. It provides a
distribution channel for financial services while also creating a method for
formalising expectations about environmental risks as economic factors.
In other words, index insurance ‘objectifies’ weather-related catastrophes
(Lehtonen 2017): their past occurrences are taken into account for defining the likelihood of future hazards, and the calculation of past and potential future losses in terms of monetary value render these catastrophes into
Aguiton 2019; 2020; Bridge et al. 2020; Christophers et al. 2020; Collier &
Cox 2021; Collier et al. 2021; Elliott 2021; Gray 2021; Grove 2021; Johnson
2013; 2021; Lehtonen 2017; Lucas & Booth 2020; Taylor 2020). These studies
make it evident how widely shared, among both public and private actors, is
the understanding that insurance technology is an obligatory passage point
for translating large-scale environmental hazards into actionable issues.
Research shows that, in fact, relevant financial technologies come in many
forms, that their use can be highly context specific, and that they can be
contested for good reasons. Nevertheless, what remains constant across
the field is the perception that the changing risks generated by climate
change create threats and opportunities for the industry; climate change
is at the core of present-day discussions on insurance and weather-related
catastrophes.
This chapter is based on a close reading of the World Bank Global Index
Insurance Facility (GIIF) document: Risk Modeling for Appraising Named
Peril Index Insurance Products: A Guide for Practitioners (RM below;
Mapfumo et al. 2017). The project articulates its general aims as follows:
‘GIIF’s objectives are to provide access to financing for the vulnerable; to
strengthen the financial resilience of the poor against the impact of climate
change and natural disasters, and to sustain food production for local communities and larger markets.’ Within GIIF, RM has been used for workshops and course material, such as Emerging Guidelines for Underwriting
and Portfolio Management. We concentrate our analysis on RM because of
the document’s programmatic and authoritative nature. What makes the
text especially interesting is how it provides normative guidelines for putting together and employing index insurance and presents arguments about
how to use – and not use – the multiplicity of environmental data to design
mechanisms of socioeconomic coordination.
We read RM to examine three themes that it unveils. First, we scrutinise
the practical means through which the soil is transformed into the index,
an abstract object of calculation. The soil itself is a complex entity that is
comprised of myriad living beings, processes, and interactions with weather
conditions and human intervention. The index performs a selection of the
soil’s elements in a process mediated by satellite technologies, information
infrastructures, and forms of modelling.
Second, we analyse why and how the index is used. It is revealed to be a
technology that transforms local uncertainties regarding the soil, weather
dynamics, and yield into financial objects. Index insurance creates a specific kind of orientation to caring for future uncertainties. It provides a
distribution channel for financial services while also creating a method for
formalising expectations about environmental risks as economic factors.
In other words, index insurance ‘objectifies’ weather-related catastrophes
(Lehtonen 2017): their past occurrences are taken into account for defining the likelihood of future hazards, and the calculation of past and potential future losses in terms of monetary value render these catastrophes into