Bangladesh's readiness for climate disaster risk finance and insurance
The discussion focused on whether international mechanisms like FRLD can meet loss and damage needs, whether insurance can be an effective tool under CDRFI, and much more
A roundtable titled "Bangladesh's Readiness for Climate Disaster Risk Finance and Insurance" was jointly organised by CARE Bangladesh and AOSED on 14 May 2026 at Hotel Sheraton, Dhaka.
The discussion focused on whether international mechanisms like FRLD can meet loss and damage needs, whether insurance can be an effective tool under CDRFI, and whether private sector finance can bridge gaps in adaptation and loss and damage funding.
Mrityunjoy Das
Deputy Director, Humanitarian and Resilient Futures Program, CARE Bangladesh
Keep updated, follow The Business Standard's Google news channel
Bangladesh ranks 13th in the Climate Risk Index (1995-2024), reflecting extreme climate vulnerability. Between 2014 and 2020, about 42 million people were affected by floods, erosion, and cyclones, with losses exceeding $4 billion from 15 major disasters, excluding slow-onset impacts with limited data.
The country loses 1-2% of GDP annually, while annual climate finance needs are about $12.5 billion, exposing a persistent gap between needs and actual flows. This underscores the urgency of reducing external dependence and strengthening domestic capacity, preparedness, and alternative financing, with community inclusion in planning.
A gap persists between climate and development finance, while loss and damage mechanisms remain weak. Greater focus is needed on local financing, social protection, risk financing, and insurance systems. Readiness is central, requiring better data systems, risk-based planning, trigger mechanisms, accountability, and faster compensation.
Meer Rifath Jahan Usha
Assistant Professor, Khulna Agricultural University
Evidence on the actual benefits of climate insurance remains limited, and even among researchers, there is no full clarity on how these mechanisms perform in practice, which in turn makes it harder for farmers to understand or trust them.
While several short-term projects have introduced insurance-related interventions, sustained long-term research is still lacking, constraining meaningful learning and system improvement. This challenge is further compounded by declining research funding, which restricts the generation of robust, policy-relevant evidence.
At the same time, there is clear potential among young researchers, but opportunities for engagement remain insufficient. Strengthening their participation in climate research is therefore essential for building more grounded, practical, and context-specific solutions.
Rabeya Begum
Director, SDS
Bangladesh receives only a fraction of the required climate finance, and the gap is unlikely to close soon. With limits in global funding, stronger domestic financing systems are essential. Private sector engagement depends on clear policy frameworks, institutional structures, and absorptive capacity.
Even when funds are available, effective use remains a key challenge for government institutions. Strong data on vulnerability, displacement, and loss and damage is critical for both international access and domestic investment.
Microfinance and NGOs remain underutilised. Pooled funds involving MFIs, private actors, and institutions like BRAC could help bridge gaps.
Fazle Rabbi Sadeque Ahmed
Research & Policy Advisor, ICCCAD
Climate risk is now a structural challenge linked to poverty, livelihoods, and development. Large populations in exposed regions depend on agriculture and informal sectors, making them highly vulnerable.
Climate change is a present reality. Despite global commitments, finance remains below pledges, with heavy reliance on concessional loans increasing fiscal pressure.
Bangladesh must strengthen domestic capacity and build sustainable financial and risk systems rather than relying on external finance. Microfinance and financial inclusion can support adaptation.
Risk-based insurance, including parametric models, can work if supported by strong data systems, reinsurance, and public trust. Public-private partnerships are essential.
Md Samiun Nabi
Head, Strategic Planning & Business Development Unit, IWM
Loss and damage funding remains far below actual needs, making it clear that reliance on it alone is insufficient and that alternative financing mechanisms are necessary. The constraint is not a global shortage of money, but rather limited access and inadequate readiness at the national level.
Although policy frameworks exist, implementation remains weak due to the absence of clear SOPs and operational guidance. Insurance penetration, still below 1%, reflects these structural gaps and needs to be embedded within broader financial protection systems rather than treated in isolation.
In parallel, weak data infrastructure and underdeveloped trigger mechanisms continue to limit effective disaster risk financing.
Ultimately, the central challenge lies in bridging global finance systems with domestic institutional capacity so that available resources can be effectively accessed and implemented.
Fariha Aumi
Chair, Brighters
A key concern is whether safety net funds are effectively reaching intended beneficiaries, as persistent transparency gaps continue to undermine delivery. Strengthening 1is therefore essential to improve targeting and ensure real impact on the ground.
Beyond funding levels, efficiency and political will are equally critical determinants of outcomes. No single financing instrument can address the scale of the challenge; mitigation, adaptation, and just transition must be pursued in an integrated manner.
Overall, climate finance must be closely aligned with social protection and transition finance within a coherent framework.
Shirin Sultana Lira
Senior Programme Manager, Embassy of Switzerland in Bangladesh
Global development is shifting with declining aid flows and changing priorities. Climate finance figures often trigger political resistance due to taxpayer concerns.
A balanced narrative is needed, reflecting both financing needs and domestic contributions. Development assistance is declining, retaining only limited humanitarian and regional climate support.
Private foundations and philanthropy require greater attention, along with stronger partnerships and institutional capacity.
Md Shamsuddoha
Chief Executive, CPRD
Risk management remains constrained by persistent measurement challenges, particularly in assessing non-economic loss and damage, though efforts are underway to develop more reliable baselines. Biodiversity finance faces an estimated $700 billion annual gap, with nearly 85% expected from domestic sources, reflecting a shift toward strengthening internal financing capacity.
Climate change, biodiversity loss, and sustainability are increasingly interconnected, requiring integrated investment frameworks rather than fragmented funding streams.
Md Belayet Hossain
Associate Director, BRAC Microfinance
Microfinance is central to rural resilience, now extending to insurance coverage for around 1.4 million farmers. Innovations include solar irrigation, rainwater harvesting.
Key challenges include low awareness, delayed claims, VAT burdens, and weak trust, with insurance penetration still around 1%. Premium financing through instalment-based models could improve accessibility for rural populations.
Haseeb Irfanullah
Independent Consultant
Non-economic loss and damage remain difficult to quantify, though baselines are gradually emerging. Biodiversity finance faces a $700 billion gap, largely expected from domestic sources, signalling a shift toward internal capacity building.
Integrated investment approaches are needed across climate, biodiversity, and social protection. Private sector reliance on CSR is insufficient, while household-level adaptation spending remains largely unaccounted for in formal systems.
Emebet Menna
Deputy Country Director, Programme
As adaptation needs rise alongside shrinking grant-based funding, pressure on vulnerable countries is intensifying.
This makes accountability, coordination, and the avoidance of siloed interventions essential.
Collaboration cannot remain declarative; it needs to be institutionalised and translated into implementation structures.
Climate finance and insurance systems, in particular, require integrated. Financing mechanisms must stay equitable and grounded in local realities, otherwise they risk misalignment with actual vulnerabilities and weak outcomes.
Sohanur Rahman
Executive Coordinator, YouthNet for Climate Justice
Coordination between NGOs, the private sector, philanthropic actors, and communities remains limited, weakening the overall climate finance ecosystem. Funding sources such as private capital and faith-based mechanisms like zakat exist, but concerns over transparency and accountability persist.
Trust is further constrained by past failures in insurance systems, while community-level contributions to resilience remain largely unacknowledged in formal frameworks. Local government institutions also face capacity gaps, particularly in climate literacy and fund management.
Emerging global mechanisms such as CBAM could significantly impact the garment sector, underscoring the need for a just transition that integrates adaptation, loss and damage, and labour considerations.
Shamim Arfeen
Executive Director, AOSED
Despite global commitments, emissions continue to rise, and climate finance pledges remain largely unfulfilled, underscoring a widening gap between promise and delivery. Climate finance, therefore, must be treated fundamentally as a matter of justice.
Insurance mechanisms should be fully subsidised by historically high-emitting countries, given the disproportionate burden borne by vulnerable nations. At the same time, poorly governed carbon markets risk the commodification of natural systems if left unchecked.
Ultimately, climate finance is not only about funding but also about governance and accountability, requiring strong civil society engagement alongside sustained domestic mobilisation.
Hafijul Islam Khan
Director, Climate Justice-Bangladesh (CCJ-B)
Climate finance is widely recognised as a right, but the central challenge lies in access. Mitigation, adaptation, and loss and damage should be understood as a continuum rather than isolated pillars, yet a structured national framework for loss and damage is still absent.
Access to the Loss and Damage Fund remains constrained by institutional barriers, including weak functional equivalency and limited capacity among accredited entities. Insurance can play a supporting role, but in vulnerable contexts it requires substantial public subsidy to be viable.
At the same time, meaningful private sector engagement depends on stronger regulatory frameworks and the introduction of effective carbon pricing mechanisms.
M Amzad Hossain
Editor, Energy and Power
True expenditure on climate and disaster risk remains unclear; incorporating household-level spending would provide a more accurate and comprehensive picture.
As external aid gradually declines, the importance of strengthening domestic financing mechanisms becomes more pronounced.
In this context, a coherent PPP framework is essential to align and streamline fragmented financing streams into a more coordinated and effective system.
Roufa Khanum
Assistant Director, C3ER
Bangladesh remains insufficiently prepared due to weak policy alignment and limited evidence for loss and damage mechanisms. Insurance systems are underdeveloped, with limited models and weak institutional grounding.
Private sector engagement remains largely passive, and the concept of just transition remains unclear in practice. The core issue is ownership, with limited grassroots participation despite existing policy frameworks.
Rehana Akhter
Political Activist, MAP Member
Climate disasters are exceeding institutional response capacity, making donor support alone insufficient. Disaster management must be treated as a national responsibility. Weak implementation and delays in critical infrastructure are increasing vulnerability.
Stronger community participation, accountable political leadership, and effective administrative oversight are essential. Improved local coordination is also needed to ensure transparency and efficient use of resources.
