Launch of the InsuResilience Solutions Fund
On the 11th of October, the establishment of the InsuResilience Solutions Fund (ISF), initiated by KfW Development Bank (KfW) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), was officially announced in Berlin: Thomas Silberhorn (Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development), Prof. Dr. Joachim Nagel (Member of the Executive Board of KfW), and Amer Ahmed (CEO of Allianz Reinsurance) opened the event at which representatives from civil society, the insurance industry and international development cooperation informed themselves about the ISF’s specific funding opportunities for the development of innovative climate risk insurance products.
Climate change will not only cause extreme weather events to occur more frequently in the future but will also cause them to be more intense. Thomas Silberhorn explained at the launch event in Berlin: „In developing countries in particular, extreme weather events can threaten livelihoods and destroy progress in development. In the event of a claim, climate risk insurances can offer quick help […].“ However, access to adequate risk transfer mechanisms against the effects of droughts, hurricanes or heavy rainfall like climate risk insurance is very limited in developing and emerging countries. That is why, KfW set up the ISF to support resilience against extreme weather events of poor and vulnerable people in developing countries.
The ISF will provide partial grant funding and advice for the development of new indirect and direct climate risk insurance products in order to bring climate risk insurance solutions from concept to implementation stage ready for market placement and to scale up already piloted projects. The facility will support joint initiatives of (local) public entities (e.g. national or regional government bodies), private companies in the insurance sector and NGOs to both leverage the expertise of the private sector and to ensure the demand and sustainability of the developed climate risk insurance products. Thereby, the ISF sets an incentive for (international) insurance companies to become more involved in the insurance markets of developing and emerging countries. “The involvement of the private sector is an essential contribution to the development of innovative and sustainable climate risk insurance products and contributes to close the coverage gap. “, stressed Prof. Dr. Joachim Nagel at the launch event.
Overall, the ISF supports the development and up-scale of financially sustainable insurance solutions for households, businesses, humanitarian organizations and governments in developing and emerging countries and thereby reduces the vulnerability to extreme weather events at the micro, meso and macro level. The BMZ has allocated EUR 15 million for the ISF. With its implementation KfW is making an important contribution to one of the objective of the InsuResilience Initiative: the identification and development of new climate risk financing and insurance solutions to close the protection gap.