At an event held in London today focused on the progress made by the Insurance Development Forum (IDF), as part of the International Insurance Society (IIS) conference, a number of commitments and news of funding were made, with the goal of furthering steps to narrowing the disaster protection gap.
Insurance and reinsurance industry attendees heard from representatives of the IDF and partner organisations, discussing the need to educate and provide technical assistance, in order ultimately to mobilise the wealth of risk capital that is available to raise disaster and climate insurance penetration around the world.
There were specific announcements from the German and United Kingdom development ministries and also the World Bank, of support that will be dedicated to narrowing the disaster protection gap for communities in the poorest countries of the world.
Stephen Catlin, chair of the IDF, commented today; “This is a big step toward activating our common mission as a critical public-private partnership empowered to take on the enormous problem of under-insurance in at-risk developing economies.” He added that the lack of an insurance safety net in much of the world “is a global problem no one organization, company or individual can solve alone.”
The new London-based Centre for Global Disaster Protection had already been announced by UK Prime Minister Theresa May at the recent G20 meetings in Germany.
Today’s event saw an announcement from Lord Bates, Minister of State at the U.K. Department for International Development (DFID) of plans for a partnership between the UK, the World Bank Group and Germany to establish a Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions.
This effort hopes to coordinate global input to efforts to narrow the protection gap and reach targets such as the coverage of 400 million people under InsuResilience.
The World Bank Group said today that it will have its own staff presence in London to support the new Centre for Global Disaster Protection, so it too can benefit from proximity to insurance and reinsurance market institutions.
Germany is set to contribute €20 million to help establish a linked World Bank Multi-Donor Trust Fund to finance country specific technical support and assistance, so that vulnerable countries can gain access to the knowledge required and support to tailor disaster risk financing mechanisms that truly help each of their unique needs.
Joaquim Levy, the World Bank Group’s Managing Director and CFO and Co-Chair of the IDF, who was present at today’s event commented; “With climate posing an ever-greater risk, we can use insurance and risk financing solutions to strengthen developing countries’ financial resilience to a wide range of threats. By using well-designed financial instruments, we can ease the impact of disasters on the most vulnerable societies, reducing the cost and damage to development progress.”
Dr. Gerd Müller, Federal Minister for Economic Cooperation and Development (BMZ), added; “Climate risk insurance helps – in a fast and cost-efficient manner. Together with the United Kingdom, the World Bank Group and other partners, Germany is working on creating the Global Partnership on Climate and Disaster Risk Finance and Insurance Solutions, which the G20 leaders have welcomed at the Hamburg Summit.”
The BMZ also committed financing to other intiiatives, as Ingrid Hoven, the Director General for Global issues, sector policies and programmes at the BMZ announced the design of a €15 million InsuResilience Solutions Fund that will support the collaboration between public and private actors that is essential to support development and roll-out of climate risk insurance programmes in developing countries.
These announcements are designed to support the creation and launch of the Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions. The IDF said that it welcomes the contributions from DFID, BMZ, and the World Bank Group to such a Global Partnership and want to broaden the engagement to include other countries and stakeholders.
The Global Partnership is another step towards the G7 InsuResilience commitment to increase climate risk insurance protection to an additional 400 million people in emerging and developing countries by 2020 and builds on the momentum that announcement has created.
It puts more rigour around the mission to broaden insurance penetration and along with the Centre promises to help increase education and understanding of risk transfer options, while also enabling countries to actually get access to insurance and reinsurance partners required to get deals and schemes in place.
“The creation of the Centre for Global Disaster Protection is a critical step forward in realizing the promise of the IDF,” said Jo Scheuer, UNDP’s Director for Climate Change and Disaster Risk Reduction. “Insurance is central in helping countries deliver development and achieving the Sustainable Development Goals. We must build on the momentum created and look to further and deepen partnerships.”
The announced facilities and commitments of support and financing are set to be closely linked to the science and academic communities, in order to ensure that best practices and transparency are development in the role of financial tools, like insurance, in sustainable development and disaster resilience.
As ever the role for the capital markets was also made clear, with insurance-linked securities (ILS) solutions such as catastrophe bonds brought up as potential risk transfer tools that will support and underpin the roll-out of insurance required to meet goals and truly narrow the protection gap.
Rowan Douglas, Chair of the Implementation Committee of the IDF, commented; “The IDF looks forward to working with the newly formed Centre of Global Disaster Protection, and the German efforts by BMZ such as the InsuResilience Solutions Fund, to develop and implement plans to deliver the services necessary to proactively prepare for and insure against disasters – a far more effective approach than rushing aid to the scene after devastation occurs.”