The United Nations Development Programme (UNDP) has announced an initiative aimed at strengthening the protection of vulnerable communities from socio-economic, climate and health-related disasters.
The Insurance and Risk Finance Facility (IRFF), established in the Finance Sector Hub, is said to significantly increase the role of insurance and risk-financing in development.
The German Government has contributed €35 million in funding for the facility in an effort to meet targets set out at the UN Climate Action Summit in 2019.
UNDP notes how disaster recovery costs the world’s 77 poorest countries an average of $29 billion annually, 3% of which is insured.
The United Nations Development Programme (UNDP) has announced an initiative aimed at strengthening the protection of vulnerable communities from socio-economic, climate and health-related disasters.
The Insurance and Risk Finance Facility (IRFF), established in the Finance Sector Hub, is said to significantly increase the role of insurance and risk-financing in development.
The German Government has contributed €35 million in funding for the facility in an effort to meet targets set out at the UN Climate Action Summit in 2019.
UNDP notes how disaster recovery costs the world’s 77 poorest countries an average of $29 billion annually, 3% of which is insured.
In 2020 alone, 980 disasters caused by natural hazards cost the global economy over US$210 billion. Following the COVID-19 crisis, 150 million people have been pushed back into poverty.
The ambition is to co-create insurance and risk finance solutions in over 50 developing countries by 2025, embed them in public financial decision-making, and greatly contribute to the InsuResilience Vision 2025 target of protecting 500 million poor and vulnerable people by 2025.
“Building the financial resilience of countries and communities is a critical element of tackling climate change and safeguarding past and future development gains. Germany is strongly committed to the InsuResilience Global Partnership to enhance protection from climate impacts,” said Dr Maria Flachsbarth, Parliamentary State Secretary, German Federal Ministry for Economic Cooperation and Development (BMZ).
“The global community made a commitment at the UN Climate Summit in 2019, and all of us – governments, industry, the development sector – need to step up our work to enable climate-proof development.”
Under the IRRF, UNDP will be driving the country level change by working with governments to include climate risk modelling work in National Development Plans and Financing Strategies, Nationally Determined Contributions, National Adaptation Plans and more.
“Risk finance and insurance solutions enable the delivery of effective disaster response and help countries to be better prepared for the impacts of climate change and other shocks by reducing humanitarian impacts, building people’s capacity to recover more quickly and strengthening community resilience. In 2020 alone, more than 200 projects in over 100 countries contributed to the InsuResilience Global Partnership, protecting an additional 137 million people.”
“The insurance industry recognizes that the new challenges we collectively face – the climate crisis being the largest of them all – require public-private solutions,” says Denis Duverne, Chairman of Axa and Chairman of the Insurance Development Forum.
“We welcome the investment UNDP is making through the launch of its Insurance and Risk Financing Facility to work together with the insurance industry at this crucial juncture.
“This demonstrates the progress the insurance and development community are making and will allow us to ramp up results on the ground.”
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
