Title: German contribution to implementing the G7 climate risk insurance initiative InsuResilience
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Global
Overall term: 2016 to 2019
Climate change has increased the frequency and intensity of extreme weather events worldwide. Its impacts on lives, livelihoods and assets threaten efforts to sustainably reduce poverty. Notably, disasters force 26 million people into poverty each year. The cost of responding to disasters and other crises will continue to increase and eventually force countries to frequently divert longer-term development finance into short-term response measures. The proportion between global insured losses to overall losses for emerging and developing countries reveals a huge protection gap. While these countries suffered 10 per cent of global overall losses between 1980 and 2012, their share of global insured losses is merely 1 per cent. To close this protection gap, the G7 countries launched the InsuResilience Initiative at their summit in Elmau, Germany in 2015. Building on this Initiative, the G20 decided at the Hamburg summit in 2017 to establish a Global Partnership for Climate and Disaster Risk Finance and Insurance; hereinafter ‘the Partnership’. The Vulnerable Twenty Group (V20) supports the Partnership.
Through the Partnership, countries have been able to execute more timely and reliable post-disaster response, and better prepare for climate and disaster risks using risk finance and insurance.
The vision of the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance is to strengthen the resilience of developing countries and protect the lives and livelihoods of poor and vulnerable people against the impacts of disasters through supporting the disaster risk financing strategy and architecture of vulnerable countries, with tailor-made solutions.
The Partnership’s strategy encompasses a three-pronged approach. Firstly, it aims to amplify the impact of ongoing initiatives. Secondly, it helps to develop new climate and disaster risk finance and insurance solutions. Lastly, it seeks to ensure that these solutions are well integrated within a broader dialogue on disaster risk management, resilience building and humanitarian relief efforts.
Additionally, the Partnership seeks to develop an open and inclusive global multi-stakeholder community of countries, experts, and practitioners working on achieving financial protection at the political, operational, and strategic levels. This community constitutes the Partnership Forum and exchanges experience, generates knowledge, promotes good practice, and raises awareness of risk finance and insurance.
Moreover, the Partnership’s Program Alliance provides a coordination mechanism of programmes, which together offer a universe of solutions to address the different resilience needs of vulnerable countries, taking into account different country risk profiles and corresponding gaps in financial protection mechanisms.
The Partnership’s Secretariat assists with the development of demand-oriented, gender inclusive and pro-poor insurance solutions. It is responsible for communications and public relations to foster collaboration between political and civil society players, and to keep track of the progress made by the Partnership.
Worldwide, InsuResilience Global Partnership supports climate risk finance and insurance solutions. The Partnership has been able to help expand existing insurance schemes and develop new ones. Currently, the Partnership supports 25 programmes in 78 countries with the help of its implementing partners. About half of the programmes are operational and are forecasted to bring about half of the 400 million people under protection by 2020. For example, the Carribean Catastrophe Risk Insurance Facility (CCRIF), African Risk Capacity (ARC) and the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) represent three regional sovereign risk pools in the Caribbean, Central America, Africa, and the Pacific regions. Over the past year, the programmes exerted a significant impact in that they provided substantial pay-outs immediately after natural disasters hit some of their member countries. For instance, CCRIF paid out more than 53 million US dollars in eight Caribbean and Central American countries after Hurricane Irma in 2017.
Some further activities of the Partnership cover the InsuResilience Solution Fund (ISF) managed by KfW, the interactive platform RISK TALK in collaboration with UNFCCC and the Fiji Clearing House, the InsuResilience and A2R Contest for Innovative Proposals on the connection between insurance and social protection, as well as two fellowships for the Leadership and Diversity Program for Regulators, taught by Women’s World Banking and faculty from Oxford University’s Saïd Business School.
The InsuResilience Global Partnership strengthens the positive development impact of risk finance and insurance arrangements through increased resilience, manifested as reduced disaster impacts and faster recovery.