Jeju introduces 'climate insurance' for construction day laborers to cover income loss during heatwaves

Jeju province in South Korea is set to introduce a groundbreaking "climate insurance" scheme designed to protect daily construction workers from income loss caused by extreme heat. This initiative, launching at the end of the month, marks the first of its kind in the country aimed at safeguarding workers vulnerable to heat-related livelihood threats.

The insurance operates on an "index-based" system, meaning payouts are triggered by predefined objective indicators rather than requiring individual proof of loss. Specifically, the insurance will activate if a heatwave warning is issued before 1 p.m. and leads to a complete suspension of work at a construction site. Workers can receive up to 80% of their lost wages for the duration of the work stoppage, capped at four hours.

Based on the standard daily wage for a general laborer in the construction industry, this could amount to a maximum payout of 68,840 South Korean won per day. The program targets daily workers employed on public construction projects exceeding 100 million won in cost, provided they are enrolled in the construction workers' pension fund. Jeju province is allocating 100 million won of its budget, supplemented by 900 million won from a "mutual growth fund" secured through a financial services commission competition, to finance the scheme over three years.

This measure comes in response to a significant increase in extreme weather events. Jeju recorded 80 days with heatwave advisories last year, more than double the 38 days in 2023. The number of heat-related illnesses also rose to 107 cases in the past year. While Gyeonggi province also offers climate insurance, it requires recipients to prove a diagnosis of heat-related illness. Jeju's system, linked directly to official heatwave warnings and work stoppages, aims for a more streamlined and accessible compensation process for daily wage earners facing the growing challenges of a changing climate.