Closing the Protection Gap
The negative impact of climate change is expected to intensify in the coming decades. Thus, governments and societies need to prepare for natural disasters such as droughts, floods and storms in order to avoid the loss of lives and livelihoods. Insurance can play a critical role in effective disaster risk management by strengthening their resilience to climate change. Timely insurance payouts not only help people to recover faster but also render access to finance for transformative measures. Giving climate risk a price also incentivises adaptation measures, fosters risk reduction and avoids future damages ex-ante. However, especially in developing economies, the share of uninsured climate risk remains high. Thus our mission is to support vulnerable people and countries in the Global South to bounce back better in the face of climate and disaster risks through innovative climate risk insurance solutions.
Climate risk insurance products need to be well adapted to the needs of the poor and vulnerable populations but also represent a financially sustainable product in order to reach scale and secure replicability. We, therefore, seek to closely involve the insurance industry. On the one hand, to leverage its expertise and know-how in the development of new and innovative climate risk insurance solutions. On the other hand, to integrate its capital in form of insurance coverage for the solutions to be developed. By doing so, we foster public-private partnerships to actively strengthen the case for the insurability of climate risks.
Developing Climate Risk Insurance Products
We support and promote the joint product development and implementation of innovative climate risk insurance products. We provide grant-based co-funding to joined partnerships where at least one partner is:
- representing the demand and needs of end-beneficiaries (e.g. national or regional government bodies, NGOs, local insurers),
- willing to act as a risk taker (e.g. reinsurance company), and
- located (i.e. officially registered) in a developing or emerging economy.
Partnerships are invited to apply for co-funding submitting proposals for the development of climate risk insurance products in specific Call for Proposals.
Since 2019, we launched four Calls for Proposals that generated high interest. We received and evaluated over 120 applications for co-financing the product development of innovative climate risk insurance solutions.
We are currently supporting projects on macro, meso, and micro level in South Africa, Serbia, North Macedonia, Colombia, Peru, Bangladesh and Ghana.
Our Projects
Large-scale smallholder farm drought insurance in South Africa
risks:
Drought
timeframe:
Sep 2019 - Sep 2021
Product / Solution:
Index-based crop and livestock insurance
objective:
Improving cost efficiency of insurance solutions and making them affordable to smallholder farmers. Enhanced local livelihoods through improved access for smallholder farmers to credit and facilitating investment in crop and livestock production.
beneficiaries:
Smallholder farmers and their families
Partnership members:
Land Bank Insurance Company Limited (LBIC) & Celsius Pro
summary:
In 2015, South Africa was hit hard by a severe drought and this particularly threatened the livelihoods of smallholder farmers. The InsuResilience Solutions Fund enables the Partnership to work together with the local insurance industry to strengthen resilience by providing access to climate risk insurance for the farmers affected. The project will enhance local livelihoods by improving access to credit, facilitating investment in crop and livestock production, and creating resilience and stability.
Climate risk insurance for family farms in Serbia
partner:
Globos Osiguranje, Europa Re
Climate risk insurance for family farms in North Macedonia
partner:
Ministry of Agriculture, Forestry and Water Economy (MAFWE), Europa Re
Mitigating risk in agriculture through climate insurance for smallholder farmers
risks:
Floods, heavy rainfalls, dry spells
timeframe:
Jun 2020 - Jul 2022
Product / Solution:
Weather-index-based agricultural insurance
objective:
Improving pilot products and scaling up weather index insurance. Increased insurance penetration affordable to smallholder farmers. Targeting 30 percent female farmers.
beneficiaries:
Smallholder farmers and their families
Partnership members:
Syngenta Foundation for Sustainable Agriculture, BRAC, Green Delta Insurance Company Limited
summary:
Besides facing enormous weather risks, Bangladesh’s smallholders have suffered heavily from the Covid-19 pandemic. A new international partnership, co-funded by the ISF, aims to provide suitable climate-risk insurance to the farmers affected. The project enhances local livelihoods by facilitating investment in crop and livestock production, and creating resilience and stability.
Closing the protection gap for Peruvian public schools
partner:
APESEG, AXA XL, Munich Re, Insurance Development Forum (IDF), Picsure, GEM Foundation, JBA Risk Management
Resilient and empowered SMEs and smallholder farmers in Colombia
risks:
Drought, excess rain, earthquake
timeframe:
May 2020 - Jun 2022
Product / Solution:
Index-based insurance
objective:
Improving resilience of micro-entrepreneurs and smallholder farmers in Colombia against natural disasters and extreme weather events.
beneficiaries:
Micro-entrepreneurs, smallholder farmers and their families
Partnership members:
Microinsurance Catastrophe Risk Organization (MiCRO), SBS Colombia S.A., Bancamia
summary:
ISF is co-funding an innovative insurance approach to improve resilience of micro-entrepreneurs and smallholder farmers in Colombia against natural disasters and extreme weather events. The project is promoted by MiCRO in partnership with SBS Seguros Colombia S.A. The climate-risk insurance solution will provide immediate liquidity in case of a natural disaster.
Climate risk insurance for smallholder farmers in Tanzania
region:
Tanzania
risks:
drought, flood, plant disease
sector:
Agriculture
Partnership members:
Pula, Reliance Insurance Tanzania
Increasing smallholder farmer resilience to climate change through technology and innovation in climate risk insurance products and distribution channels in Ghana
region:
Ghana
risks:
Drought, flood, plant disease
sector:
Agriculture
Partnership members:
Pula, Ghana Agricultural Insurance Pool (GAIP)
