Munich Re and a host of specialist insurers are set to go ahead with an innovative micro-insurance project for developing countries.

The three-year project has been funded by a €2 million ($2.6 million) grant from the German Ministry for the Environment.

The project will roll out in the Caribbean where small farmers and shareholders are vulnerable to losing their livelihoods after hurricanes.

Munich Re is teaming with the Caribbean Catastrophe Risk Insurance Facility and specialist microinsurance broker MicroEnsure to form the Munich Climate Insurance Initiative.

They will develop up to three different insurance products to be marketed and tested in at least three different countries.

Developing countries in disaster-prone areas are expected to be hit hard by the consequences of climate change.