Facing Growing Natural Disaster Risk -- United Nations, World Bank Group and Insurance Industry Partnership Endorses G7 InsuResilience Target and Approves Framework for More Resilient Societies
The Insurance Development Forum (IDF), a new public-private partnership between leaders of the United Nations (UN), the World Bank Group, and the insurance industry, announced today it has won support for an insurance-based risk management strategy to promote economic recovery and resilience to climate events and natural disasters in vulnerable regions. The IDF decided to contribute to achieving the G7 InsuResilience target of 400 million of the most vulnerable people in developing countries being provided with increased access to direct or indirect insurance coverage against the impacts of climate change and related natural catastrophes by 2020.
The IDF is led by a Steering Committee, chaired by Stephen Catlin, Deputy Executive Chair of XL Group Ltd., and Co-Chairs Joaquim Levy, World Bank Group Managing Director and Chief Financial Officer, and Helen Clark, Administrator of the United Nations Development Program. Other Steering Committee members include Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, Dr. Robert Glasser, Special Representative of the Secretary-General for Disaster Risk Reduction and head of the United Nations Office of Disaster Risk Reduction (UNISDR), and 13 insurance industry CEO’s. Additional governmental and public sector organizations are expected to engage in the coming year.
The IDF Steering Committee met in the margins of the annual UN General Assembly and adopted an insurance-based risk management strategy to strengthen the resilience in vulnerable regions affected by climate and disaster risks, in line with the UN Agenda 2030. At the heart of this strategy, the Steering Committee approved a proposal to create a Technical Assistance Facility (TAF), which will assemble public and private insurance industry resources and tools necessary to support governments in building public-private partnerships that will better manage the financial consequences of climate events and natural disasters while increasing the use of insurance in emerging markets and developing countries. Work has begun on securing the funds needed to launch the program.
The IDF manages additional work streams focusing on building out the TAF and related needs of the InsurResilience targets and related objectives of recent UN agreements including the Sendai Framework, the Sustainable Development Goals and the Paris Climate Agreement. Among these working groups are: The Risk Modeling and Mapping Working Group, the Insurance Regulation & Resilience Policy Working Group, Insurance and the Humanitarian System, Indicators and Development Metrics for Resilience and Insurance, and Insurance Communications. The Steering Committee expressed its deep appreciation for the efforts of the working groups which mobilized more than 200 experts and officials from the industry and public sector organizations since the IDF launch in April 2016.
“With growing natural disaster losses it is essential that governments learn how to incorporate risk management fundamentals into their planning, budgeting and governing processes so that their citizens can be better protected,” said Catlin. “The world is watching to see whether this unique public and private sector partnership can deliver results that will use insurance industry risk management skills to build resilience that benefits economies and families.”
Helen Clark, IDF Co-Chair and Administrator of the United Nations Development Program (UNDP) commented: “For many developing countries with scarce resources, rebuilding is often beyond their means. Typically, a disaster is followed by appeals to bilateral, regional, and international partners for aid relief and financial support. This support, however, often falls well short of what is required. Systemic lack of funds and recurrent inefficiency of recovery initiatives on the ground impede progress. Insurance can be an efficient, fast-disbursing mechanism to build back better in vulnerable countries and communities hit by disasters, but also to reduce risks and the costs of risks in the long term. I agreed to co-chair the Insurance Development Forum because I believe it can make a real difference in addressing these challenges.”
Joaquim Levy, IDF Co-Chair and World Bank Group Chief Financial Officer stated that “many emerging market and developing countries lack sufficiently developed insurance markets, which does stifle growth and has a negative impact not only on business but on general welfare, notably among the poorest. The lack of insurance instruments or broader risk-pooling or risk-mitigation mechanisms is also evident in the public sector, affecting government’s ability to respond to natural disasters and other large-scale events. The World Bank Group is engaged in more than 40 countries in the design of financial protection strategies, including reforms on public financial management and financial instruments and also in the development of risk-mitigation strategies. But more needs to be done, and we cannot do this alone. We stand with the Insurance Development Forum and its partners to facilitate our activities and use risk management instruments in helping eradicate poverty and raise shared prosperity.”
Rowan Douglas, chair of the IDF Implementation Committee and head of the Capital Science and Policy Practice at Willis Towers Watson, said, “We are grateful for the Steering Committee’s guidance. We will now move forward to the next stage of implementation with partners across the industry, governments, international institutions, NGOs and academia. My thanks to more than 200 experts and practitioners who have worked tirelessly over the past five months to bring this together and especially the Working Group co-chairs that have created a remarkable global organization so quickly. We all recognize a unique moment and opportunity to make a huge step forward in the protection of lives, livelihoods and communities – realizing the benefits of insurance across public, private and mutual and cooperative sectors. We will redouble our efforts between now and our next major milestone and the World Bank-IMF Spring Meetings in Washington DC next April.”
About The Insurance Development Forum
The Insurance Development Forum (IDF) is an unprecedented public-private partnership between leaders of the United Nations (UN), the World Bank Group, and the insurance industry. Its overall objective is to contribute to closing the protection gap—the gap between insured disaster losses and the actual economic costs of disasters—by optimizing and extending the use of insurance and its related risk management capabilities to build greater resilience for people, communities, businesses and public institutions that are vulnerable to climate change, disasters and related economic shocks.
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