Sri Lanka's tourism sector is highly vulnerable to climate-induced disruptions, posing significant risks to livelihoods and economic stability. The increasing frequency and severity of climate-related disasters threaten lives, food and water security, property, and overall economic prosperity. Climate change also undermines socioeconomic stability and hampers development efforts. Adaptation is therefore essential to building resilience, necessitating proactive risk reduction and financial protection mechanisms. Financial resilience is crucial, with insurance playing a key role in disaster recovery and risk mitigation. Traditional insurance models may be insufficient, highlighting the need for innovative solutions like parametric insurance, index-based coverage, and risk-sharing mechanisms. Improving accessibility and affordability can strengthen economic resilience across the sector, particularly for micro, small, and medium-sized enterprises (MSMEs). A consultation conducted by SLYCAN Trust and the Sustainable Development Council assessed existing climate insurance mechanisms, identifying key challenges such as affordability, awareness, and policy gaps. This brief summarises the discussion, with a focus on integrating climate insurance into broader adaptation strategies to safeguard the tourism industry.

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