About the InsuResilience Global Partnership
Background and Mandate of the InsuResilience Global Partnership
Climate change increases the frequency and intensity of extreme weather events worldwide. Climate shocks, both slow and rapid onset, and other types of disasters such as earthquakes compromise lives, livelihoods and assets. These impacts affect the poorest and most vulnerable people and countries the hardest and threaten hard-won development gains. Each year, disasters force 26 million people into poverty, according to a World Bank report. The cost of responding to disasters will continue to increase. Governments of developing countries and affected households divert funds to address short-term (disaster) response measures. Hence, there is an urgent need to shift from reactive climate and disaster risk management to investing in pre-arranged, predictable financing on standby for early action, relief and recovery. The certainty for funding enables more reliable planning and can reduce the impact of shocks. Ultimately, people and countries will be able to bounce back better in the face of climate and disaster risks.
Disaster risk finance and insurance solutions, when used as part of a comprehensive disaster risk management approach, can enable more resilient long-term development. For example, in sovereign disaster insurance schemes, the financial risk is transferred from public funds to the private sector. This enables more fiscal security for developing countries and continuous planning in a changing risk environment. As a result, lives, livelihoods, businesses, infrastructure, and public finances can be protected.
Against this backdrop, the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions was officially launched at the UN Climate Conference COP23 in November 2017. The Partnership was initiated during the German G20 Presidency with a strong involvement of the Ethiopian V20 Presidency. The aim was to create a global V20-G20 initiative with a needs-based approach to increase resilience amongst the most poor and vulnerable people. It brings together G20 and V20 countries, as well as civil society, international organisations, the private sector, and academia. Since the launch, more than 80 diverse partners have signed the Joint Statement and became members of the Global Partnership.
Vision and Objective of the InsuResilience Global Partnership
The vision of the InsuResilience Global Partnership is to strengthen the resilience of developing countries and to protect the lives and livelihoods of poor and vulnerable people from the impacts of climate shocks and disasters by enabling faster, more reliable and cost-effective responses. The goal of the InsuResilience Global Partnership is laid out in its Vision 2025, announced at the UN Secretary General´s Climate Action Summit in September 2019, in New York.
As an interactive, inclusive global multi-stakeholder community, the Partnership
- links needs with solutions
- coordinates implementation efforts
- shares learning and best practices
- integrates and aligns risk financing with broader climate and resilience policy agendas
- seeks to amplify the impact of ongoing initiatives
- and supports the development of new climate and disaster risk finance and insurance solutions to help meet growing needs in developing countries.
The Partnership uses its convening power to establish a common agenda and standards among its diverse membership of countries, experts and practitioners – from national and sub-national governments, international organisations, private sector, academia and civil society. These actors are working on financial protection at the political, research and strategic level.
Benefits of Climate and Disaster Risk Finance and Insurance
Even with ambitious mitigation of greenhouse gas emissions, states and societies need to prepare for the unavoidable effects of climate change. Adaptation and disaster risk reduction can decrease but not eliminate negative impacts from drought, floods, cyclones or other types of disasters. Poor and vulnerable people in developing countries are disproportionally affected, especially as they have fewer capabilities to cope and to adapt to such shocks. Therefore, lives are lost, livelihoods are ravaged and development gains experience significant set-backs.
Pre-determined disaster risk financing can strengthen rapid response to and recovery from climate and disaster shocks. They protect governments and individuals against risks arising from extreme weather events that are increasing in both frequency and intensity as a consequence of climate change. Predictable and reliable financing is essential for governments and individuals to anticipate and respond to disasters in an effective and timely manner. Furthermore, the process of designing and implementing disaster risk financing solutions can itself encourage greater risk understanding, an essential first step towards managing the risk.
Disaster risk financing and insurance solutions can be designed to provide rapid liquidity in the face of disaster shocks, allowing rapid emergency relief and recovery. This saves lives, protects livelihoods and assets and safeguards development gains. In the case of climate risk insurance, this instrument can help to close a global equity gap. When an insured event occurs, the provision of assistance is no longer an act of charity but gives the people affected agency. Moreover, the burden on public funds, also as part of humanitarian efforts, can be reduced and shifted to the private sector.
Developing effective disaster risk finance solutions requires ‘risk layering’ to identify which mechanisms are best suited for the different kinds of climate and disaster risks. This approach includes:
(1) a coordinated plan for anticipatory and post-disaster action agreed in advance,
(2) a fast, evidence-based decision-making process, and
(3) pre-arranged financing to ensure that the plan can be implemented.
Building on this approach, risk finance and insurance solutions are most effective when embedded in a country’s overarching risk management and macro-fiscal strategy, aiming to avoid negative impacts as far as possible in the first place. Consequently, governments can react quickly and effectively according to predetermined criteria in the event of disaster.
Climate risk insurance as one instrument of financial risk transfer can be provided on a micro or macro level. In the case of microinsurance, individuals, households or small companies insure themselves – for example against crop failures. In the event of damage caused by extreme weather they receive direct pay-outs through their insurance. In the case of macro-insurance, governments insure themselves against climate risks, either individually or together with other countries in so-called “risk pools”. In the event of damage, they rapidly receive pay-outs that are disbursed to benefit the affected population, particularly the poor and vulnerable.
G7 Climate Risk Insurance Initiative
The InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions builds upon the G7 Climate Risk Insurance Initiative, which was launched at the German Elmau Summit in 2015.
The overall objective of the G7 Climate Risk Insurance Initiative is to stimulate the creation of effective climate risk insurance solutions and markets and the smart use of insurance-related schemes for people and assets at risk in poor and vulnerable developing countries. It aims to increase the number of poor and vulnerable people in developing countries benefiting from direct or indirect insurance by up to 400 million by 2020.
During the 2017 UN Climate Conference in Bonn, the G7 initiative was merged into the InsuResilience Global Partnership which tackles a wider spectrum of challenges, broadens the reach to a wider set of actors and has set additional aims. The G7 initiative will continue to reach its original goal within the framework of the InsuResilience Global Partnership and its Vision 2025.