 shifts in climate patterns. Climate resilient sustainable development pathways run along a spectrum of those things decision makers can plan for and pre-empt, complemented by a suite of contingency measures to help manage climate risks and impacts that have not been accounted for or addressed through planning and risk reduction. This chapter argues that insurance has a role to play across this spectrum.

Insurance Related Instruments as Navigation Tools for Adaptation Frontiers
Insurance is the transfer of risk of a loss from one entity to another in exchange for a payment which is called premium. The insured person (policyholder) is trading the possibility of a loss for a guaranteed cost to a risk taking entity (the insurer). Insurance works by pooling losses, transferring risk of fortuitous losses and indemnification (Rejda and McNamara 2017). By spreading risks among people and over space and time, insurance-related tools allow to collectively manage losses that would overwhelm individual members of a group, limiting the need for members to take costly individual action. In this arrangement, the premium replaces the "uncertain prospect of losses with the certainty of making small, regular premium payments" (Churchill 2006). In case of a loss which is covered by the insurance policy, the insured holds the right to claim compensation. Based on these principles, disaster risk insurance is a facilitative mechanism which provides post-disaster financial support against the loss of assets, livelihoods, and lives at an individual, community, national, and regional level. "Climate risk insurance" refers to a special type of disaster insurance, covering losses and damages caused by extreme weather events, which are intensified and increased in frequency by climate change. Climate risk insurance schemes may be both direct and indirect. Direct insurance approaches are those in which the insured benefits directly from transferring risk to a risk taking entity (such as an insurer). In the event the insurance agreement is triggered, the insurance payout is directly transferred to the insured. Indirect insurance approaches are those where the final intended target group benefits indirectly from payments intermediated by an insured government or from being a member of an institution that has insurance ; see also chapter by Linnerooth-Bayer et al. 2018 in this book).
This chapter argues that insurance can support people and communities on the frontier of adaptation in several ways, helping them in • exploring adaptation frontiers by contributing to a framework for signalling the magnitude, location, and exposure to climate-related risks and providing signals when adaptation limits are approached; • moving away from adaptation limits by improving ex-ante decision making, incentivising risk reduction and creating a space of certainty for climate resilient development; • remaining in the tolerable risk space by facilitating financial buffering as part of contingency approaches when climate-related risks exceed current capabilities to manage.
In the following, the different roles of insurance in exploring and managing adaptation frontiers are described in detail. It has to be noted, however, that transferring risks in a cost-efficient way through insurance is only one step in a systematic process. The effective management of adaptation frontiers, aimed at enabling climate-resilience development, requires a comprehensive approach to risk management. This approach should involve a portfolio of actions aimed at improving the understanding of disaster risks, reducing and transferring risk as well as responding to and recovering from events and disasters-as opposed to a singular focus on any one action or type of action (see Fig. 13.2).

Insurance as Part of a Risk Signalling Mechanism
To be able to make informed decisions in a world of increasing climate risks, actors need to explore adaptation frontiers. Therefore, countries and people need reliable information about the magnitude, location, and exposure to climate-related risks as well as signals to determine their leeway regarding adaption limits. Risk transfer tools like insurance can support risk signalling mechanisms in the following two ways.

Catalysing Risk Assessment to Signal the Magnitude, Location and Exposure to Climate-Related Risks
Assessing the risk of losses and damages is a prerequisite for identifying needs and policy priorities. Risk assessment brings attention to the hazard potential, the exposure and vulnerability, and in this way it can raise awareness and expose new options for managing the risks (Warner and Spiegel 2009). Publicly collected and open source data and risk assessments, as well as open source hazard modelling, can contribute meaningfully to national and regional risk-management and investment decisions. However, risk assessments are often not performed in developing countries (Collier et al. 2009). Being the precondition for calculating premium levels for policyholders, risk assessment is a vital part of insurance. Accordingly, insurance can be one way to facilitate regional and international data analysis-such as establishing data standards, methods and data repositories-and can therefore be a catalyst for risk assessment. Thereby, insurance-related tools can help set up a framework for signalling the magnitude, location, and exposure to climate-related risks.
At country level, the African Risk Capacity's (ARC) risk modelling and early warning software platform, Africa RiskView, uses satellite-based data to estimate the impact of weather events on vulnerable populations-and the response costs required to assist them-before a hazard season begins, and as it progresses. This instrument provides the hard triggers for ARC's insurance mechanism. But it also allows countries to monitor and analyse rainfall throughout the continent and estimate the impact of weather developments on vulnerable populations in-season, "thus providing ARC Member States and Partners with an innovative early warning tool" (ARC 2015). At micro level we find plenty examples where weather data was collected together with policy holders (e.g. through rain gauges) during the design and set up process of insurance products. This data ultimately contributed to increasing farmers' sensitivity to changing rainfall patterns and helping them develop a better understanding of the likely impact of weather on yields (Sharoff et al. 2015;Hellmuth et al. 2009).

Limits of Insurability as Means to Signal When Adaptation Limits Are Approached
In the context of increasing climate risk, the concept of insurability plays an important role. Vulnerability to rising climate change risks is not only of importance to people but also the insurance industry is vulnerable to rising risks. Increasingly catastrophic losses made private insurance companies in developed countries pull out of some markets, making insurance unavailable for affected households (Botzen and van den Bergh 2008). Herweijer et al. (2009) therefore conclude that "climate change has the potential to threaten the widespread availability and affordability of insurance for people and their property in many regions, that is, the insurability of the risk." Stahel (2003) defines the concept of insurability as the "natural borderline" between the market economy and nation states: risks that cannot be insured need not to be legislated; uninsurable risks, however, have to be dealt with by nation states." Thereby, increasing limits of insurability can provide a strong signal that actors or systems reached the upper end of adaptation frontiers, existing on the edge of adaptation limits. This information could incentivise large scale governmental action to effectively reduce risk and increase insurability in a way that wouldn't be feasible or affordable for individual actors.

Improving Ex-Ante Decision Making with Insurance
Increasing risk of extreme weather events driven by climate change strengthen the need for a more forward-looking approach to disaster risk management, with greater focus on reducing risk before a disaster strikes (Ranger and Fisher 2012). Moving away from purely ex-post responses, actors need to manage risk proactively, before a disaster strikes. This includes reducing risk ex-ante and building long-term resilience against extreme weather events.

Price Signals as Means to Incentivise Risk Reduction?
Insurance can play a role as messenger of climate change impacts through its terms and price signals. Insurance companies have an incentive to 'risk price' as much as possible so that they can accurately predict the probability of a claim, and the likely cost of that claim. Through the technical risk pricing of contracts, insurance can provide valuable information for societal and economic actors in understanding the risks and how risk cost may be changing. When the risk is priced correctly "the price itself indicates the risk level, which can help people and firms make betterinformed decisions about risk taking and risk mitigation investments" (Ranger and Fisher 2012). In an ideal scenario, insurance thereby incentivises risk reduction behaviour, e.g. by making it a prerequisite for reducing premiums or providing the option for people to work for their insurance cover by engaging in communityidentified projects to reduce risk and build climate resilience. In this way, insurance could contribute to preventing losses and damages. In a theoretical example, the high costs of insurance against flood would provide an incentive for an actor, wanting to buy a house in a flood prone area, not to buy. Instead, if investing into risk reduction measures directly, this leads to a reduction in premium price and insurance might provide a strong incentive for the actor to invest into risk reduction activities. In this way "insurance can create powerful incentives for people to manage their risk better and reduce losses" (ibid.). However, the evidence on actual insurance schemes incentivising risk reduction is weak. Surminski and Oramas-Dorta (2013) found that only a few already existing schemes show an operational link between risk transfer and risk reduction (Surminski and Oramas-Dorta 2013). Chambwera et al. (2014) moreover show that local and state regulations might undermine incentives to decrease risks, for example by prohibiting fully risk adequate insurance rates.

A Space of Certainty Allowing for Improved Ex-Ante Planning and Decision Making
Insurance-related approaches, in combination with a wide range of others at local, national, regional and international levels, can contribute to creating a space of certainty within which improved ex-ante decision making is possible Hoppe and Gurenko 2006). By creating a secure investment environment, insurance instruments can enable productive risk-taking on the part of individuals and governments