Speaking at the Insurance Development Forum panel debate on confronting global underinsurance amid heightened global risks, at the 2017 Rendezvous de Septembre (RVS), Rowan Douglas, CEO of Capital Science and Policy, Willis Towers Watson, said the industry is at a turning point that could revolutionise the use of re/insurance in the global humanitarian system.
“I really think talking to the humanitarian group, I think we’re at an absolute inflexion point around the role of insurers and the scale of use in the humanitarian system, so at the moment on average every year the humanitarian system funded by donor agencies of OECB countries is spending billions of dollars a year on usually post-event response to natural disasters nevermind civil strikes, but natural disasters.
“Billions of pounds and dollars a year.
“I think it’s quite likely, with the success frankly of KLIP and others, that what has been currently done in the scale of millions of pounds will actually be wrapped up in a very significant way.
“Imagine what, just some increase in those billions of pounds spent sometimes inefficiently post-event, could be used in the scaling up of serious protection for the Caribbeans.
“I think that given the success of what we’ve seen, the only challenge actually is to lift the scale.
“How much better could it be if some of those Caribbean Islands were not receiving tens of millions of pounds of humanitarian assistance, but receiving hundreds of millions of pounds and dollars to support their necessary reconstruction almost automatically, fast, and without having to wait for a hand-out and hoping that that comes in the next six months.”
Swiss Re’s KLIP programme reinsures a pioneering livestock insurance programme that uses satellites to monitor vegetation available to livestock and triggers financial payouts to farmers phones when drought conditions get so bad that animal lives are at risk.
At Swiss Re’s RVS press briefing on Monday, CEO Christian Mumenthaler said the KLIP programme value-chain was one of the “most advanced in terms of insurance; the claim is triggered digitally, and the payout is also digital on peoples phones.
“The problem is these livestock farmers in the north of the country are uninsured and when there’s a drought, there’s a huge disaster, the cattle die, there’s conflict usually associated with loss of life.
“There was a real life test in 2016, it was very dry in the North of Kenya and the payment was made to 40,000 farmers and the good thing is it paid out on their phone, it’s been a very positive experience, which obviously we’re keen to scale up in other parts of the world.
“The payment system that was created there is working very well, we can do payments through the phone. So the innovative thing here is that we wanted product which triggers before the cattle dies, so we used satellite imagery as you see here. You can measure how much green there is versus how much brown. And based on the index if it drops below a certain level we know it’s gonna be dangerous for the cattle and farmers.
“So in this case, we’re getting paid to avoid the claim.”
It’s innovative programmes such as these that use the simplest of technological solutions to significantly improve lives and resilience that create a fundamentally strong case for the re/insurance industry while closing the protection gap.
And with some of the most influential re/insurance executives and firms along with the Insurance Development Forum looking for how to expand these solutions and work alongside the humanitarian systems, coming years will bring significant expansion and change to how re/insurance is deployed, as; “that would not only make better economic sense, but actually it would drive resilience in those economies and societies,” Douglas said.
Swiss Re’s Mumenthaler said the industry has the know-how and the ideas to move beyond the current “inflexion” point in widespread re/insurance use by humanitarian groups: “Over the last 10 years we have implemented together dozens and dozens of solutions, so I think the proof of concept is there, it’s feasible, all kinds of countries can do it, I think the big challenge is scaling up, we need to scale up. But everything is here, the ideas are here, the solutions are here, but the scaling up is the phase we’re in.”