New commitments have been made to the InsuResilience initiative, that seeks to provide direct or indirect insurance coverage to an extra 400 million of the world’s most vulnerable people by 2020, with the German government committing US $125 million to help expand the initiatives remit.
The initiative seeks to bring climate insurance and risk transfer solutions to many more of the world’s poorest, most vulnerable and at-risk communities.
The work of InsuResilience helps to shift the focus of leading insurance and reinsurance firms outside of peak risk zones and into the developing countries where support and collaboration is often required to enable premiums to be paid and insurance schemes to even work.
Yesterday the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions was launched at the COP23 climate meeting, held in Bonn Germany, the next phase in the development and ramping up of the initiative.
This new phase brings the existing member G20 countries in partnership together with the V20 nations, which are the group of 49 of the most vulnerable countries in the world.
“The Global Partnership is a practical response to the needs of those who suffer loss because of climate change. And I am very proud that it has happened under Fiji’s Presidency of COP. At the same time, it is a means of preparing for a more resilient form of development for those who will have to adapt to the great challenge of climate change,” commented COP23 President and Fijian Prime Minister Frank Bainimarama.
Thomas Silberhorn, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development of the German government, announced the US $125 million of financial backing for the new Global Partnership.
Silberhorn explained, “This Global Partnership brings important groups like the V20 group made up of those countries most vulnerable to climate change and the G20 group of the world’s strongest economies together around one table so that they can join forces to increase the resilience of poor and vulnerable people to the impacts of climate change. Instead of only reacting to catastrophes we want to shift to planning, preparing and protecting.”
The new Partnership will help InsuResilience to meet its initial objective, of bringing insurance coverage to 400 million, plus help these efforts go beyond the original goal.
Patricia Espinosa, Executive Secretary of the UN Climate Change Secretariat, said, “People devastated by recent weather events and communities vulnerable to climatic impacts are looking to the nations meeting in Bonn for an answer, for support and hope for the future.
“This new and higher ambition initiative represents one, shining, example of what can be delivered when progressive governments, civil society and the private sector join hands with creativity and determination to provide solutions.”
The Global Partnership will be tasked with bringing together, “Key players from developing and industrialised countries, international organisations and development banks, the private sector, civil society and the scientific community will work together to develop concrete and practical solutions that will provide financial protection against climate risks and natural disasters.”
To achieve this an agnostic view as to the source of risk and reinsurance capital is required, also to domain or domicile, with the focus being on efficiency of risk pooling and transfer, utilising all available tools and structures.
The insurance-linked securities (ILS) market, catastrophe bonds and parametric triggers will have a key role to play in enabling the sustainable roll-out of coverage to so many vulnerable people.
For it is one thing to roll-out the coverage and another entirely to ensure it is sticky and the vulnerable nations can afford renewals over the longer-term.
While subsidies and premium payment will help to drive InsuResilience towards its goal, it is capital efficiency and structural innovation that will enable the coverage to remain in-force.
Reinsurance capital is going to underpin these efforts, meaning the ILS market and its investors should embrace the opportunity to support this initiative and find ways to bring their capacity to bear on supporting the world’s poorest as they seek to become more resilient to climate and weather related disaster risks.
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