Promoting affordable and sustainable climate and disaster risk insurance – wrap up of the 4th High Level Consultative Group Meeting of the IGP
On 1 June 2021, the High-Level Consultative Group (HLCG) came together to discuss the strategic direction of the InsuResilience Global Partnership (IGP) to better promote the uptake of climate and disaster risk finance and insurance (CDRFI) in poor and vulnerable countries. The agenda focused on smart premium and capital support.
The COVID-19 pandemic has resulted in increasingly limited fiscal spaces in all countries around the world. The HLCG highlighted that sustainable and affordable CDRFI-solutions are an ongoing challenge to be addressed if Vision 2025 is to be achieved and 500 million poor and vulnerable people are to be covered by 2025 against climate and disaster shocks through prearranged finance and insurance mechanisms. The Honorable Carlos Dominguez emphasised that for the Philippines, “the reallocation of a majority of government funding to pandemic recovery highlights the importance of utilizing smart disaster risk and climate financing mechanisms”.
Based on the background note on “Smart Premium and Capital Support”, drafted by the InsuResilience Secretariat after several stakeholder interviews, members provided their insights and recommendations on how to structure premium and capital support to improve CDRFI sustainability, affordability, and uptake. Switzerland’s State Secretariat for Economic Affairs, Ms. Marie-Gabrielle Ineinchen-Fleisch, a new member of the HLCG, showed her support for sustainable solutions to protect public finances stating, “Sustainable solutions to protect public finances from natural disasters must be holistic and consider a smart mix of risk mitigation, risk management and risk transfer measures, tailored to the risk and the country situation. For Switzerland, this is a priority both domestically and in our international cooperation”. Similarly, another new HLCG member Mr. Renato Redentor Constantino, Executive Director of the NGO Institute for Climate and Sustainable Cities based in the Philippines expressed his support stating, “Investing in climate and disaster risk finance is a moral obligation; it also makes economic sense. We take pride in being part of this group, which seeks to help vulnerable people survive and thrive amidst not only the pandemic but also typhoons and other disasters, and the impacts of climate change.”
Subsequently, the IGP Secretariat was tasked with drafting a policy note on “Smart Premium and Capital Support” for endorsement at the next HLCG meeting.
This decision allows the IGP to maintain its strong position in guiding and shaping the global conversation on CDRFI. Working towards affordable and sustainable CDRFI-solutions is critical to achieve Vision 2025 and promote resilience for the most poor and vulnerable people.
In addition to this decision, a number of exciting announcements were made during the meeting:
- Germany will fund the V20’s Sustainable Insurance Facility, from this year. This will enable V20 countries to submit tailor-made project proposals to better protect Micro-, Small-, and Medium-Enterprises against extreme weather events. Dr. Maria Flachsbarth, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development in Germany said during the meeting, “Germany is pleased to support the V20’s Sustainable Insurance Facility starting in 2021. This will enable V20 countries to submit tailor-made project proposals to better protect small enterprises against extreme weather events.” Minister Alfred, Alfred from the Republic of the Marshall Islands also took the opportunity to express his gratitude on behalf of the V20 Group: “On behalf of the V20 Group, we would like to express our appreciation for Germany’s (BMZ) commitment to support the implementation of the V20-led Sustainable Insurance Facility over the coming years. As climate damages mount, enabling the SIF can only help accelerate the development of domestic financial protection markets. The V20 Group looks forward to other major economies such as the US and UK to join Germany and the V20 Group as we move in concert to advance the broad climate finance agenda that places vulnerable countries at the heart of our efforts.”
- Canada is providing 1.6 million Canadian dollars to sponsor the expansion of the Centre of Excellence on Gender-smart Solutions. With this enhancement, the Centre of Excellence will scale up activities and drive forward inclusive climate and disaster risk finance and insurance. Canada’s Ambassador for Climate Change, Ms. Patricia Fuller stated, “The Centre of Excellence is a valuable resource for all of us. It can transform the way we respond to gender-specific needs in climate and disaster risk financing and insurance products, to enhance protection from the impacts of climate change.”
HLCG members represent various stakeholder groups. As a platform encouraging exchange among members, the HLCG strives to achieve a balance of representation from the Global South and Global North. Additionally, it aims to encourage seminal dialogues between the public and private sector. Together, members work to help countries better prepare for climate-induced disasters and build resilience in the face of climate and disaster risks.