Government agencies commit support to build financial resilience of poorest and most vulnerable economies
The Insurance Development Forum (IDF), a partnership of the World Bank Group, the United Nations Development Programme, and global insurers, applauds announcements by the development ministries of the United Kingdom and Germany to dedicate support to narrow the disaster protection gap for communities in the poorest countries.
Speaking at the IDF Session at the International Insurance Society Global Forum in London, Stephen Catlin, chair of the IDF commented: “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.”
Building on Prime Minister Theresa May’s announcement at the recent G20 summit, Lord Bates, Minister of State at the U.K. Department for International Development, outlined plans for the UK partnership with the World Bank Group and Germany for creating a Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions. The UK and the World Bank Group are setting up a Centre for Global Disaster Protection in London, which will support the poorest countries to strengthen their disaster planning and get finances in place before disaster strikes so they can better manage the economic impact of emergencies and build their resilience.
The UK is providing £30 million for the Centre for Global Disaster Protection, which will draw on UK and international expertise to provide neutral advice, innovation and cutting edge science to help build cheaper, faster and reliable finance in emergencies that delivers the most benefit for the poorest people and ensures losses are not borne by people, business and government, which can slow growth and trap people in grinding poverty.
As part of the Centre for Global Disaster Protection, the World Bank Group will establish staff presence in London to support the Centre and benefit from closer connectivity to insurance and reinsurance market institutions. Germany will contribute €20 million as a first step to a linked World Bank Multi-Donor Trust Fund for country specific technical assistance and smart support with the aim to assist vulnerable countries to tailor disaster risk financing mechanisms.
Joaquim Levy, the World Bank Group’s Managing Director and CFO and Co-Chair of the IDF, who spoke at the meeting, said, “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) welcomes the cooperation: “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.”
Ms. Ingrid Hoven, Director General for Global issues, sector policies and programmes at BMZ outlined at the International Insurance Society Global Forum in London the design of a €15 million InsuResilience Solutions Fund to support public and private sector collaboration on climate risk insurance programmes in developing countries.
These announcements by DFID and BMZ will contribute to the creation of a Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions. This was welcomed by G20 leaders at the Hamburg Summit this month. The IDF welcomes DFID, BMZ, and the World Bank Group joining forces to contribute first elements to such a Global Partnership and want to engage many more countries and stakeholders.
The Global Partnership builds on the G7 InsuResilience commitment to increase climate risk insurance protection to an additional 400 million people in emerging and developing countries by 2020. The V20, a forum of 48 developing countries vulnerable to climate change, which is supported by UNDP, as well as civil society and the insurance industry have all called for further improving such risk finance and insurance instruments and collaborating towards this goal. The announced developments are fully aligned with the World Bank Group’s mission of eliminating extreme poverty by the year 2030 and building shared prosperity by focusing on the needs of the people in the bottom 40 percent of each country’s income distribution. The impact of natural disasters and climate change are projected to have their most severe impact on the world’s poorest people and most vulnerable countries.
“The creation of the Centre for Global Disaster Protection is a critical step forward in realizing the promise of the IDF,” remarked 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.”
As an early priority of the IDF Working Groups, more than 200 people from industry, NGOs, regulators, academia and international institutions have donated more than 5,000 hours of their input to support the design and development of these critical facilities. The Forum will continue to support their progress. These new facilities will be closely linked to the science and academic communities, to help develop best practices and transparency in the role of financial tools, like insurance, in sustainable development and disaster resilience.
Rowan Douglas, Chair of the Implementation Committee of the IDF said: “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.”
The Insurance Development Forum (IDF) is an unprecedented public-private partnership led by the insurance industry with the United Nations Development Programme and the World Bank Group. Its initial focus is to contribute to closing the protection gap — the gap between insured disaster losses and the actual economic costs of disasters — by optimizing and extending the use of insurance and its related risk management capabilities to build greater resilience for people, communities, businesses and public institutions that are vulnerable to climate change, disasters and related economic shocks.
The IDF is chaired by Stephen Catlin. It is co-chaired by the UN Development Program (UNDP) and Joaquim Levy, the World Bank Group Managing Director and Chief Financial Officer. The Steering Committee includes industry leaders, UN agency leaders, international institutions and others to establish priorities and mobilise resources, and the International Insurance Society (IIS), Geneva Association, International Cooperative and Mutual Insurance Federation (ICMIF) and Association of Bermuda Insurers and Reinsurers (ABIR) are ex-officio members. The Implementation Committee of the IDF is chaired by Rowan Douglas, Willis Towers Watson and co-chaired by UNDP and Samuel Munzele Maimbo, World Bank Group.
Follow the IDF on Twitter at @InsDevForum.