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Insurance is the “ultimate community product” for social resilience: ICMIF CEO

2nd June 2017 - Author: Luke Gallin

Insurance and reinsurance is far more than just a policy and the capabilities and capacity of the risk transfer industry must be utilised to increase global disaster resilience, stressed Shaun Tarbuck, Chief Executive Officer (CEO) of the International Cooperative and Mutual Insurance Federation (ICMIF).

HandshakeAs part of the Global Platform for Disaster Risk Reduction (Global Platform) held in Cancun, Mexico from May 22nd – May 26th, 2017, Tarbuck addressed an audience during the Risk Transfer and Insurance for Resilience Working Session, urging the need for improved global disaster resilience, supported by insurance.

Specifically, Tarbuck highlighted the opportunity for the insurance sector and broader risk transfer industry, which includes reinsurers and increasingly the alternative reinsurance, or insurance-linked securities (ILS) space, to be more than just policy providers and drive improvements in international disaster resilience.

“With over 300 years of experience in understanding risk, the insurance industry has a crucial role to play in promoting resilience across the world.

“By measuring risk, communities, cities, local and national governments can identify, plan and manage risk to build resilience to shocks that were previously uncertain. Because what gets measured can be managed,” said Tarbuck.

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Initiatives established at the COP21 summit in Paris and the G7 target of insuring 100 million individuals by 2020, focus on the development of sustainable insurance systems that provide adequate and affordable protection to the vulnerable, with an end vision of regions ultimately having the capacity and ability to protect themselves at some point in the future.

While insurance protection schemes such as the African Risk Capacity (ARC) and the CCRIF SPC in the Caribbean, for example, clearly offer valuable protection against certain perils for its members, only by increasing resilience and preparedness can the potential impact be mitigated in the first place. And Tarbuck feels the insurance sector is well placed to address the issue and provide invaluable support and insight.

“Efforts to improve global resilience and address the protection gap have previously been primarily driven by a handful of private/public stakeholders. Given the scale, scope and complexity of the resilience and protection gap challenge, a coordinated and collaborative approach bringing together the insurance industry and relevant stakeholders is recognised as critical,” continued Tarbuck.

Collaboration between risk transfer markets, governments and local communities is essential in understanding the specific resilience needs of both individuals and regions, and is required in order to move past pure insurance products to a platform for risk reduction combined with sustainable insurance coverage, explained Tarbuck.

Awareness and education are also issues in many parts of the world, with some lacking the understanding of the risks they face and simply being unaware that insurance solutions do exist that can help to protect livelihoods against natural disasters.

“Working with communities to build literacy to their risk exposure, with the shared objective to reduce risk, builds trust and creates a robust platform to deliver at scale. This scale is essential if we are to close the protection gap and address the underlying drivers of risk,” said Tarbuck.

Tarbuck draws on the expansion of microinsurance solutions over the last decade or so, suggesting that around 500 million now utilise some form of microinsurance protection.

“However, evidence is suggesting the industry has moved too fast, too anxious to achieve scale, without focusing on making a real impact to people’s livelihoods. With a potential market of over 2 billion people still to be given access it is an important junction where we are at today,” warned Tarbuck.

One scheme launched at the COP21 Paris summit is the ICMIF 555, which aims to offer resilience insurance to 5 million people in 5 countries over 5 years. This, combined with Insurance Development Forum’s (IDF) microinsurance working group, which Tarbuck co-Chairs, are designed at expanding the role of insurance in global disaster resilience.

“I would like to conclude by restating our belief that insurance is more than a policy. Insurance and its related capabilities provide mechanisms to build risk literacy by engaging with communities with the shared objective to reduce the risks they face. We believe that insurance is the ultimate community product to support societal resilience,” said Tarbuck.

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