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Pastoralist communities, who rely on livestock for their livelihoods, are particularly vulnerable to extreme drought which is becoming more common due to climate change. Index-based Livestock Insurance (IBLI) has proven vital in these communities but has not appealed to women because in most cases men control the family’s livestock and the insurance payments for losses. Family Insurance is built on the technical foundation of IBLI but provides coverage in “family” units that pay for household needs during droughts that threaten families’ wellbeing.

The Sectoral Community (SC) on Integrated Resilience Approaches in Agriculture was developed to inform, design and test innovative integrated solutions in the agricultural sector, as well as support the development of funding criteria for such projects. Following a series of meetings and presentations the SC issued the following guidance for those designing projects and developing proposals for integrated resilience approaches in agriculture and those funding these projects. For project designers and developers, it is recommended to identify the resilience objectives and risk management activities, as well as cost-effective and complementary options. Furthermore, they should seek feedback from various stakeholders and build on existing evidence and best practices. The recommendations for funders include classifying the integration of various stages and processes as an investment objective, considering cost-effectiveness, enabling and incentivizing the use of sound economic risk modelling, and taking into account unintended consequences and tradeoffs. Funders should also pursue a principles-based approach when making investment decisions. Learn more about the InsuResilience Focus Topic on Integrated Approaches here.

In late 2020, the InsuResilience Integrated Approaches Working Group launched four sectoral communities (SC) to increase the deep-dive into topic-specific discussions. One of them focuses on linking Nature- based Solutions (NbS) and risk transfer instruments. Overall, this sectoral community seeks to share knowledge on NbS and Risk Financing, help explore and test new risk financing solutions and identify ways to further mainstream NbS and Risk Financing into global climate change adaptation and Disaster Risk Reduction agendas. The SC conducted a survey of how insurers employ NbS. The survey also indicated a lack of agreed assessment tools for the NbS benefits, with a majority of insurers relying on pilot studies rather than widely accepted methodologies. The SC agreed to host a workshop on March 2022 to explore this further and discuss how NbS can be better integrated in catastrophe models and insurance pricing to account for changing protection levels. The workshop was a key milestone for the SC and marked the transition from initial scoping (phase 1) to solution-oriented collaboration (phase 2).

Oxford Policy Management evaluated the African Risk Capacity (ARC), which provides sovereign and other insurance and builds capacity in member countries to respond to climate disasters. The evaluation, financed by the UK’s Foreign, Commonwealth and Development Office, and the Agence Française de Développement, looked at ARC’s work to grow insurance risk pools and strengthen country capacity to respond, as well as its longer-term sustainability. A detailed value for money analysis was also undertaken. It found that ARC has strengthened capacity to respond to drought through contingency planning and insurance in 17 out of 35 member states. Its support is widely valued by recipients. However, the distribution of support to beneficiary households by governments that received a payout often did not happen within the mandated time period, undermining its main objective. The capacity built often does not appear to be sustainable beyond ARC’s support. The value for money assessment rated economy and efficiency as adequate and adequate-to-good, respectively. It was rated less well on effectiveness and equity, due to the problems in reaching beneficiaries on time and challenges in government targeting processes. ARC’s drought insurance risk pool has grown considerably in recent years – due in a large part to subsidies on insurance premiums and a programme of parallel insurance for NGO networks. However, ARC is facing a significant financing and organisational challenges. A set of recommendations are made to address the evaluation findings.

Over the past decades, a suite of new Climate and Disaster Risk Finance and Insurance (CDRFI) tools has been generated across the development, the humanitarian and the private sector. Examples include index-based insurance, catastrophe bonds, forecast-based financing, pooled funds and many other innovations. Unfortunately, these innovative instruments have often been implemented largely in isolation of each other. Most of them are not integrated in comprehensive disaster risk financing strategies or linked more systematically to recent humanitarian efforts to scale anticipatory action (AA). They all serve different purposes, address different target groups and are based on different modalities – which has its advantages but also results in untapped potential, a loss of synergies, and risks leaving behind those who need the financing the most. In March 2021, the Anticipation Hub, the InsuResilience Global Partnership (IGP) and the Risk-Informed Early Action Partnership (REAP) teamed up to launch the “Sectoral Community on Linking Anticipatory Action to Risk Financing”. The objective of the Sectoral Community (SC) is to bring together the development & humanitarian sector, public & private actors, civil society actors, researchers and think tanks to exchange experiences and share ideas on how various CDRFI tools and anticipatory action can be better integrated. To deepen the discussions, the SC members came up with the idea to draft ‘think pieces’ – succinct, policy-relevant opinion pieces in which SC members could advocate for a particular position or objectively describe the issue/challenges and possible opportunities, options and solutions at hand. SC members developed a set of 10 questions, and they were then invited to address those questions based on their experience, technical expertise and further research. The think pieces are not necessarily providing the views of the organisations of the respective authors but their personal perspective. About every 4-6 weeks the SC gathered over the course of 2022 to discuss and refine the ideas coming out of the think pieces.

The 3rd edition of the Munich Climate Insurance Initiative (MCII) Annual Report is available. Download the report to learn about all MCII engagements and activities for the June 2021 – June 2022 period.

This report compiles all major events, announcements and achievements related to the InsuResilience Global Partnership that took place during COP 27 in Egypt. The InsuResilience Secretariat co-organised seven events with a focus on Climate and Disaster Risk Finance, vulnerability to climate change and many more in Sharm-El-Sheikh. We welcomed two new members to the partnership: The Systematic Observations Financing Facility (SOFF) and the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).

The high exposure of Jamaica to natural and climate-related disasters is posing an increased risk to the country’s population as well as its macroeconomic and financial outlook. The Government of Jamaica is addressing this risk by implementing a disaster risk financing strategy that aims to improve the country’s financial resilience through prearranged financing instruments including a contingency fund, contingent credit and catastrophe insurance. Supported by the World Bank, GRiF and USAID, a catastrophe bond provides the Government of Jamaica with USD 185 million in storm protection for three years until December 2023. The country’s first-ever cat bond transaction complements the strategic financing instruments and reduces the country’s financing gap in a cost-efficient way.

While the Central Highlands in Vietnam are the largest production hub for coffee in the country and the largest Robusta coffee producer in the world, the region remains the second poorest region in the country. This makes it even more difficult for local smallholder farmers to build resilience against the increasing impacts of climate change. With the aim of reducing their vulnerability, the Alliance of Biodiversity International and CIAT together with partner organizations is piloting a Coffee Climate Protection Insurance (CCPI) scheme to enhance the capacity of smallholders and agribusinesses to cope with climate variability and change. The scheme incorporates the use of forecasts into agro-advisories, and an integrated index insurance approach for drought, excessive rainfall and temperature for coffee farmers to reduce risks and encourage good farm-management practices.

In partnership with the Vulnerable Twenty (V20), the Group of Seven (G7) committed to jointly work towards a Global Shield against Climate Risks. To this end, this concept is proposed together by the V20 and the German G7 Presidency and aims to set out a potential structure of the Global Shield (GS), including key elements and processes. In its current version, it includes the diverse perspectives of the G7, V20 and members of the InsuResilience High-Level Consultative Group (HLCG) and Program Alliance (PA). It will be tabled for endorsement at the upcoming InsuResilience HLCG meeting in October 2022 with the aim of launching the GS at COP27 in November 2022.