Insurance protection for climate-resilient progress

The World Bank has estimated that about $300 billion of the country's commercial and industrial assets are vulnerable to climate-related disasters.

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There are large gaps in Vietnam in terms of insurance protection for property and agriculture

Patrick Lenain, senior associate at the Council on Economic Policies, looks at the gaps in insurance protection and how solutions for such gaps can be crafted.Vietnam is highly exposed to climate change. Typhoons, heavy rain precipitation, coastal flooding, saltwater intrusion, heatwaves and droughts are increasingly frequent and intense.

Communities and businesses are facing mounting economic losses when these extreme weather events occur. Farmers are particularly exposed because much of agriculture is concentrated in low-lying deltas, where changing weather threatens rice yields, aquaculture and export crops.

In 2024, Typhoon Yagi alone resulted in $3.4 billion in economic losses, while the succession of 21 storms in 2025 caused damage approaching $4 billion.

Similar trends are underway around the world: more frequent and intense typhoons in Southeast Asia, devastating wildfires in the United States and Australia, and sudden floods in Europe. Climate scientists and weather modellers predict that the occurrence of these disasters will increase further.

Ambitious policies to reduce global carbon emissions are essential to limit the effects of climate change, but their impact unfolds over decades. Adaptation measures, such as seawall construction, mangrove restoration and urban greening, also require time, planning and capital.

In the meantime, insurance can provide immediate financial buffers to mitigate the impacts of extreme weather. By pooling premiums and spreading risk across policyholders, insurers can compensate those who suffer losses and face reconstruction costs after a disaster.

Yet the rapid increase in climate-related payouts is straining the industry. According to Aon, insured losses from global natural disasters in 2025 were 27 per cent above the long-term average since 2000.