As part of a new collaboration with the UN Development Programme (UNDP), members of the Insurance Development Forum (IDF) have committed to offer up to US $5 billion of risk capacity to support climate resilience in developing countries.
The initiative hopes to increase insurance protection in climate-exposed countries in lines with the InsuResilience Vision 2025 goals, which include the provision of cover against disaster and climate shocks for 500 million individuals.
The German Federal Ministry for Economic Cooperation and Development (BMZ) and the U.K. Department for International Development (DfID) have also pledged to support the effort.
“We stand at a pivotal moment in time with climate change causing more frequent; and more severe storms, floods and droughts,” said Achim Steiner, UNDP Administrator.
“Our environment, water resources and biodiversity are under assault from pollution, warming oceans, rising sea levels and ever-increasing temperatures — insurance and risk financing are critical means to help properly tackle these issues,” he continued.
“UNDP is committed to markedly increasing its risk financing and insurance portfolio, working across inclusive insurance, insurance investments and natural capital while mainstreaming the fundamentals of risk, and risk-financing into key development processes.”
The IDF will offer the $5 billion insurance capacity for 20 developing countries, prioritised by their vulnerability to climate risks and their readiness to integrate risk management practices into their development plans.
Via a public-private partnership, the IDF will also provide an openly accessible modelling platform and ecosystem for use in risk transfer making decisions, while providing technical expertise to help fill gaps in risk model coverage and understanding.
The Forum has invited all its members to actively engage in this effort, and has already received endorsements from Allianz, Aon, Axa, Munich Re, Renaissance Re, Scor, Swiss Re, Willis Towers Watson.
Denis Duverne, Chairman of AXA and IDF, commented on the announcement: “Given the risks countries face today, our industry has a responsibility to take the lead in driving action that is needed from both the public and private sector.”
“Our industry commits not only to the offered USD 5 billion re/insurance capacity,” he added, “but to develop and share openly accessible modelling platform and ecosystem infrastructure for climate risk models and our expertise to help build up risk management capabilities in those countries that need it the most.”
“We hope that the concerted efforts we announce today will truly contribute to build a more resilient world.”
Acting as a strategic partner to steer the work of the initiative, the BMZ will mobilise financial support through co-financing with the private sector.
Similarly, the UK Government has announced a new contribution to the Global Risk Financing Facility (GRIF) of up to £90 million.
“Today, we are turning the page onto a new chapter of the InsuResilience Global Partnership through a new program with UNDP, the private sector and the Insurance Development Forum,” said Maria Flachsbarth, Parliamentary State Secretary to the Federal German Minister for Economic Cooperation and Development.
“It will benefit up to 20 particularly poor and vulnerable countries through better data and technical assistance, and through the expansion of insurance specifically for poor people,” she explained. “In this context, we will enhance our bilateral engagement by 20 million euros and intend to enhance cooperation with multilateral partners and, in particular, UNDP at a similar magnitude.”
UK International Development Secretary Alok Sharma further stated: “Every year natural disasters force an estimated 26 million people into poverty. As the pace of a changing climate increases, the effect felt by the world’s poorest will only increase.
“Our increased support will make sure developing countries can better prepare for and deal with the devastation caused by extreme weather and natural catastrophes.”
