The Asian Development Bank (ADB) has announced a new project to develop climate-smart insurance for micro, small, and medium-sized enterprises (MSMEs) in the Philippines to be administered through the Asia-Pacific Climate Finance Fund (ACliFF).
The climate-smart insurance project represents the first project under the Vulnerable Twenty Group’s (V20) new Sustainable Insurance Facility (SIF).
The ABD notes that MSMEs remain underserved and, in some instances, unreached by insurance markets, leaving them highly vulnerable to climate and disaster shocks.
“Supporting the climate and disaster resilience of MSMEs not only supports the resilience of the overall economy, but indeed the business owners, employees, and the communities they serve, many of whom are vulnerable and low-income themselves,” said ADB Sustainable Development and Climate Change Department Director General Bruno Carrasco.
ACliFF is a multidonor trust fund managed by ADB. It was established with financial support from the Government of Germany’s Federal Ministry of Economic Cooperation and Development (BMZ), whose funding will support the climate-smart insurance program.
“Small enterprises frequently lack access to effective risk management tools, such as climate risk insurance, to protect against climate and disaster shocks,” said BMZ Director General Jürgen Zattler.
“Promoting insurance access and adoption among small enterprises provides financial protection that helps to safeguard development gains and avoid reliance on adverse and less effective coping mechanisms. I very much welcome ADB’s support to respective V20 efforts; contributing to the goals of the InsuResilience Global Partnership.”
Addressing the impacts of extreme weather events is one of four priority areas for the financial risk management products supported by ACliFF. The fund will also explore future collaboration with the V20’s SIF in other countries of Asia and the Pacific.