The United Nations Development Programme (UNDP) has announced a partnership on parametric insurance development for the most vulnerable with global insurer and asset management group Generali this morning.
The partnership will provide financial and technical resources to develop risk transfer solutions for the world’s vulnerable, with a goal of keeping the protection responsive and designed to meet the needs of the communities and businesses in question.
The pair will work together to design digitally enabled parametric insurance solutions for vulnerable families and small businesses, develop large-scale and cost-effective risk finance solutions, and also promote thought leadership on human development and social innovation.
Generali Group CEO Philippe Donnet explained, “Financial protection, business development and human rights all go hand in hand. Private and public institutions must work together to better understand how insurance solutions can be accessible and affordable for the people who need them the most. Insurance can contribute to socioeconomic stability and, in the event of natural catastrophes, can lead an effective and accelerated recovery.
“Insurance should not only be a remedy after natural disasters. Rather, methodologies pioneered by the industry help us gather data and consequently assess potential risk. We therefore acquire a deeper understanding of how and when to reduce the impact of potential losses. We are eager to help shape UNDP’s ambitious agenda of protecting lives, building resilience and driving inclusive economic growth.”
“On average, the world’s poorest countries lose $29 billion every year from disasters yet a meagre 3% of these losses are covered by insurance,” added UNDP Administrator, Achim Steiner. “This new partnership with Generali will allow UNDP to extend much-needed insurance solutions to vulnerable families and businesses — from smallholder farmers suffering in the face of drought; defending natural capital at risk from climate change in coastal communities; or rolling-out financial protection for people displaced by conflict and instability.”
The multi-year partnership will blend Generali’s insurance and reinsurance expertise with UNDP’s long-term focus on financing and development.
The partnership also sees Generali committing technical and financial resources to UNDP’s Insurance and Risk Finance Facility (IRFF).
The United Nations Development Programme (UNDP) launched the Insurance and Risk Finance Facility (IRFF) in 2021, as an initiative to build financial resilience and bridge a $1.4 trillion global health, mortality, and disaster protection gap, with support from the insurance-linked securities (ILS) market expected in future.
The partnership will also look at the role of venture philanthropy in protecting lives and livelihoods, encouraging innovative social entrepreneurship projects in the space of insurance and risk finance.
Jan Kellett, Team Leader: Insurance and Risk Financing, United Nations Development Programme, also commented on the news, “It is great privilege to join this event to launch a brand-new partnership between Generali and the United Nations Development Programme. It takes place as the world faces a climate crisis that is now ‘widespread, rapid, and intensifying’. Nearly half the global population is now ‘highly vulnerable’ to its impacts.
“Climate change is having a disproportionate impact on some of the world’s most vulnerable communities. On average, the world’s poorest countries lose 29 billion dollars every year from disasters. Yet a meagre 3% of these losses are covered by insurance. At the same time, the COVID-19 pandemic has stretched the thin finances of developing countries to breaking point. In short, dealing with climate change has become an extremely costly reality.
“At UNDP, we keenly recognise the need to leverage the unique know-how of the insurance industry. That is why, as part of our Sustainable Finance Hub, we have recently launched our Insurance and Risk Finance Facility. Already operational in more than 20 countries, the Facility will work with the industry and governments to develop insurance and risk-finance solutions in a minimum of 50 countries by 2025. It unites UNDP’s longstanding cooperation with governments across the globe to drive forward sustainable development — with the insurance industry’s unrivalled understanding of risk and product development.”
Daniel Stander, Senior Advisor to the United Nations Development Programme, said, “At COP26 in Glasgow, the critical role of the insurance industry was highlighted in bold. It has an increasingly important role to play in protecting lives, livelihoods, and assets — boosting long-term resilience. Indeed, better financial management of crises and shocks helps to ensure economic, political, and social stability. Insurance also helps to drive growth — freeing up resources that can be invested in crucial areas like healthcare or clean energy.
“Building on our shared commitment to ‘leave no one behind’, Generali’s new partnership with UNDP will blend Generali’s insurance expertise with UNDP’s long-term focus on financing and development. This partnership will provide resources for the design of digitally-enabled insurance solutions that will protect vulnerable families and businesses.”