If you drive a car, you'll almost certainly have insurance to pay for any damage caused by a road accident. Driving comes with risk — of damage to personal property, and even death.

But driving presents another risk. Emissions from our cars, factories and energy systems are making the planet a more dangerous place. And that risk won't be covered by your insurance policy, no matter how comprehensive it is.

Unlike the consequences of a dangerous driving incident, the environmental damage caused by fossil fuel emissions is likely to fall on someone else. These are often people who live in parts of the world who haven't benefited from fossil-fuel driven development: subsistence farmers in Africa; the inhabitants of remote, low-lying islands disappearing under the Pacific Ocean; or Caribbean coastal communities unable to cope with ever-more frequent hurricanes, to name just a few.

Yet some of these people — or their governments — are taking out their own insurance policies against the impacts of climate change, thanks to a push in the international community initiated by Germany.

The InsuResilience Global Partnership was launched at the COP23 climate talks in Bonn last year. With over $500 million (€440 million) in donor funding, its goal is to see 400 million of the world's poor and vulnerable people insured by 2020.

These policies are designed to pay out if, or when, people are hit by extreme weather events that are becoming more frequent and more severe as a result of climate change. Collaborators and promoters of the initiative include the United Nations Environment Program, the World Bank, and insurance companies including Munich Re and Allianz.

The logic of insuring ourselves against the unquantifiable and inescapable risks of a climatic system spiraling out of control requires something of a mental leap. In fact, most of the schemes being supported by the initiative can at best provide a quick injection of cash to help hold the fort while poor countries wait for humanitarian aid. But frequently, they fail to do even this.

You get what you pay for

Climate insurance policies don't work in quite the same way as in a car crash, where an insurer assesses the damage and pays for it to be fixed or replaced. With climate insurance, the aim is to get the money out fast. Assessing damage would take too long and push up the price of premiums; so payouts are triggered by certain weather conditions, such as a given wind speed in a storm or rainfall dropping below a certain level during drought.

That means sometimes, a policy pays out even though the holder got lucky and escaped any damage. And sometimes a policy does not pay out, even though millions of people have been hit.

Consider the case of Kenya, which from 2014 to 2016 paid premiums of up to $9 million to African Risk Capacity (ARC), an organization that sells drought insurance to entire African nations. Kenya experienced droughts in each of those years, affecting an estimated 4.6 million people — but ARC's weather model triggered no payouts.

The ARC and two other "regional risk pools," the Caribbean Catastrophe Risk Insurance Facility and the Pacific Catastrophe Risk Assessment and Financing Initiative, which sell policies to governments in the Caribbean and Pacific regions respectively, are intended to insure up to three-quarters of the 400-million-people goal.

The aim is for countries to pay their own premiums. African governments have so far paid 95 percent of premiums, ARC told DW.

These organizations have made payouts, most in the millions of dollars, to dozens of countries. But according to DW's analysis of available data, no country has recuperated more than 10 percent of the costs it faced from extreme weather in payouts — and most far less.

A policy designed to cover the full cost of every extreme weather disaster would be way beyond the economic means of the affected countries. As a result, not every disaster is covered, and payouts are effectively calculated according to what the holder can afford to pay in premiums, rather than the actual potential costs of a disaster.

Is it really insurance against climate change?

This same sort of reverse calculation operates with microinsurance, which is supposed to cover the remaining 100 million people of InsuResilience's target, through organizations like the Climate Risk Adaptation and Insurance in the Caribbean (CRAIC), which is funded by the German government.

One CRAIC scheme offered protection against hurricanes in St. Lucia. Walter Edwin, a beekeeper on the island, paid the minimum premium, a locally affordable rate of around $35 a year. Under its conditions, if the wind hit a certain speed, a policyholder could claim a payout of up to 10 times that, so $350.

Edwin received a payout from the scheme which he used to help buy syrup for his bees after a storm pummeled the island and destroyed their food source. He later traveled to Bonn to promote the initiative at COP23. But, pleased as he was with his payout, he decided not to renew his policy. 

The Munich Climate Insurance Initiative, which runs CRAIC in partnership with local insurance companies, said it could not disclose how many people were covered by the scheme. But its partner in St. Lucia told DW uptake was low — even though, unlike traditional microinsurance schemes that are usually targeted at farmers whose crops or livestock would be at risk from extreme weather, CRAIC policies were offered to anyone in the area with or without at-risk assets.

An industry expert who didn't want to be named told DW that policyholders without assets at stake were effectively placing a bet on whether or not a hurricane was going to hit the island.

If the sector at times stretches the definition of insurance, the climate part of climate risk insurance is also something of a misnomer.

Imagine an insurer offering to cover your car at a fixed rate for the next 10 or 20 years, with the knowledge that over that time the car's brakes would fail, roads would disintegrate, potholes would open up and road markings would fade away. 

In reality, as with any other insurance product, weather risk and the resulting premiums are calculated annually, based on existing data. They do not calculate or take into account increasing climate-related risks expected in the years and decades to come. And the policyholder isn't covered against the risk that extreme weather events will become more frequent or more lethal.

In fact, as risk increases, premiums will only become more expensive, and payouts are likely to be ever less adequate to cover the scale of damage inflicted by extreme weather events.

Numbers vs. impact

The goal to insure 400 million people was announced by G7 leaders at the Bavarian mountaintop resort Schloss Elmau in 2015, with a deadline five years in the future. Chancellor Angela Merkel was congratulated for getting the seven wealthy nations to make a loose commitment to phasing out fossil fuels, while at the same time criticized for failing to pin down details of how they were to fulfil pledges on climate finance.

Since then, nongovernmental organizations have worried that the impressive-sounding but fairly arbitrary goal has diverted attention from more effective adaptation strategies, and encouraged involved agencies to shoot for numbers rather than impact.

In an extensive report on climate risk insurance released last April, Oxfam pointed out there has been little monitoring and evaluation of InsuResilience's work to date, and what has been done has been mostly focused on counting the number of insured people. "This is entirely about coverage, it says nothing about impact," the study said.

Kenya decided to cancel its policy for the 2016/2017 season after the droughts it experienced didn't qualify for a payout. In fact, according to ARC's own cost-benefit analysis, the scheme is insuring countries against disasters that happen too frequently. For premiums to be affordable, the insurance company should calculate that they won't actually have to make a payout very often.

Karsten Löffler, co-head of the Frankfurt School-UNEP Center for Climate & Sustainable Energy Finance, argues that valuing an insurance policy based on how much you pay in premiums versus how much you get back in payouts misses the point. In an ideal insurance situation, what people are paying for is peace of mind.

"This is a big misunderstanding of the value of insurance," he said. "The biggest value of insurance is if there is no incident and you just pay your premium and nothing happens."

But when only a small fraction of a country's recovery costs are covered after a drought or hurricane hits — and only if computer models match the reality on the ground — that piece of mind is eroded if there are no additional contingency plans.

Advocates of climate risk insurance stress that it should be just one tool in wider approach to "disaster risk reduction," alongside adaptation measures such planting different crops, developing more resilient infrastructure and early warning mechanisms. Other financial mechanisms, such as prearranged credit allowing a country hit by disaster to quickly access money to deal with the aftermath, is another tool.

The World Bank recently approved exactly this for Kenya, in the form of a $200 million Catastrophe Deferred Drawdown Option (Cat DDO). Government economist Vincent Mutie Nzau said ARC had been working hard to convince Kenya to renew its policy — an ARC growth strategy document seen by DW reads as if it's more interested in expanding its customer base than identifying those in need of help — and Kenya may yet renew its drought protection policy.

But Nzau said what ARC had to offer was "not an efficient instrument compared to what Cat DDO can bring to the table."

Sidestepping the polluter pays principle

Löffler's ideal insurance scenario, in which the disaster never comes and the policyholder doesn't have to worry about how to cope if it did, is a long way from the reality of Africa's subsistence farmers or coastal communities in the Caribbean. Disasters will and do come, and according to the latest report from the Intergovernmental Panel on Climate Change, the situation is expected to escalate a lot faster than anticipated.

That inevitability frames the problem in terms that are much more challenging for international negotiators — keen to talk about opportunities and solutions — and private companies wanting to be seen doing their bit. But while the peace of mind climate risk insurance offers vulnerable countries may be limited, the model does perhaps serve to ease the minds of richer countries.

The money industrialized countries are feeding into climate risk insurance is separate from, and on a much smaller scale, than the money industrialized countries have committed to help developing countries adapt to and mitigate the effects of a changing climate through the Green Climate Fund.

But climate risk insurance is somewhat trendy when it comes to the more controversial area of climate finance: "loss and damage."

Loss and damage has been a sticking point in international climate negotiations. Poor countries want help — mainly financial — to deal with those impacts of climate change they cannot adapt to; the coming catastrophes that are too late to avoid. Richer countries have baulked at the idea of being held legally or financially accountable for the monstrous fallout of their economic growth since the Industrial Revolution.

With climate risk insurance, these countries might have found a way of repackaging the problem. When the issue of loss and damage comes up, they can point to the money they're funneling into insurance, a solution that aims to stimulate a worldwide market in climate risk.

Yet at the same time, they're establishing a framework in which the victims of climate change pay for the damage themselves.

Poor solution for those who can't afford better

Not only is the idea of insuring ourselves against the inexorable threat of climate change difficult to square logically, critics argue it frames a humanitarian problem as the victim's own responsibility. If you wreck your car while driving uninsured, you can't expect much sympathy if you can't afford to get it fixed up.

Poor countries aren't at greater risk from climate change because they happen to be in hotter, wetter or lower-lying parts of the world. Plenty of European farmland also sits below sea level. Vast swathes of the United States and Australia are prone to drought. London, Miami and Osaka are all perilously close to the rising ocean. But the risks there are lower because these countries have the money to invest in resilient infrastructure and social safety nets to catch those hit by disaster.

In its report, Oxfam points out that regional risk pools don't make sense for richer countries because they would be much better off simply putting money aside or borrowing on international markets. Ironically, the threat climate change poses to the economies of the poorest and most vulnerable countries is only eroding their credit ratings further, making it even harder for them to borrow.

And, as St. Lucia beekeeper Walter Edwin stressed, climate change doesn't just manifest in a sudden livelihood-smashing storm once every few years. It's much more insidious than that.

"There are certain years when you get too much rain and that affects the flowers, and then at other times the drought lengthens, it goes on," he told DW. Plants struggle with the erratic weather; there are fewer flowers and less honey.

But many of the most threatening changes, like the rising seas that are gradually inundating farmland with saltwater, are impossible to insure against.