The Insurance Development Forum (IDF) has announced its intention to facilitate investments in robust infrastructure within the insurance sector to enhance the resilience of vulnerable communities in emerging economies against climate change and natural disasters.
Michel Liès, chair of the IDF Steering Committee, explains, “The Insurance Development Forum is today issuing an unprecedented call to action to the global re/insurance sector to support the investment in resilient and sustainable infrastructure in vulnerable communities. COP28 highlighted the urgent need to scale up the financing for resilient infrastructure.”
To achieve this, the IDF Infrastructure Task Force has developed a blueprint over the past year to drive increased and impactful investment in the insurance sector. This blueprint aims to create a pipeline of projects tailored to meet the investment criteria of the insurance industry.
Focused primarily on smaller to mid-size commercial infrastructure projects in developing and emerging markets, these projects span sectors such as renewable energy, water, transportation, social services, digital infrastructure, telecommunication, and nature-based solutions aimed at enhancing resilience in vulnerable communities.
Investments will primarily be made through senior and mezzanine secured debt, with credit profiles aligned with global insurance industry requirements. The IDF seeks to establish partnerships with DFIs and credit enhancement providers to develop innovative investment structures.
The IDF aims to swiftly bring replicable and scalable resilient infrastructure projects to the market, utilising the risk analytical capabilities of the insurance industry to define investment and community resilience.
To implement this blueprint, the IDF is collaborating with BlackRock, leveraging their expertise in infrastructure investment and blended finance, as well as their understanding of the needs and requirements of the insurance industry.
Liès continues, “The blueprint was designed by insurers with our specific investment needs in mind. We see this as essential for companies’ and countries’ long-term sustainability, and the effective mobilisation of insurance industry capital towards a much-underserved segment of the infrastructure market in emerging and developing countries.”
Philipp Hildebrand, Vice Chairman of BlackRock, comments, “BlackRock is delighted to partner with a group of our most strategic insurance investors to help advance their objective of building greater resilience against climate change and other natural disasters in emerging markets.”
Charles Hatami, Global Head of the Financial and Strategic Investor Group at BlackRock, states, “With developing nations facing a significant shortfall in the capital they need to build resiliency and to support a low-carbon transition in their economies, we see innovative solutions, such as public-private partnerships and blended finance structures, as important tools for mobilising greater private capital into these markets.”
“We look forward to jointly exploring with the IDF ways to evolve the investment universe for blended finance beyond equities and into debt, in a way that meets the specific needs of insurers and delivers attractive risk-adjusted returns along with positive measurable outcomes,” Hatami adds.
Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, remarks, “The IDF is proud to be at the vanguard of this important work, demonstrating in material terms the value of the insurance sector to the wider global community. We believe we can provide a practical contribution towards bridging the funding gap in emerging markets’ infrastructure which is estimated at USD 1.3 trillion.”
“I am convinced that our blueprint will constitute an efficient answer to some of the needs climate-vulnerable emerging and developing countries are facing. It will also show the concrete commitment of a number of financial institutions to resilient infrastructure and further strengthen the IDF’s track record of delivering results that can inform longer term structural shifts in global resilience,” Iyahen concludes.
