IDF says 2023 will be 'year of action' on disaster resilience
The IDF is mobilising partnerships, resources and expertise to fill the protection gap
On average, the world’s low-income countries lose $29bn every year from disasters yet just 3% of these losses are covered by insurance
A continued strong focus on implementation, advocacy and engagement will make 2023 a year of action on disaster resilience, the Insurance Development Forum (IDF) has said.
In its latest annual report, the IDF stressed how insurance and risk financing saves lives, drives growth and builds resilient economies, while accelerating progress across the Sustainable Development Goals.
“In the midst of the world’s climate emergency and socio economic imbalances, we are determined to make impactful change and focus on tangible actions and increased engagement across the IDF Network to bring projects under management to fruition and launch new initiatives and partnerships,” the IDF said.
The report stressed that climate change is the world's number one risk.
“That includes an increasing number of climate-change-induced disasters that are upending lives and livelihoods," Michel Liès, chair of Zurich Insurance, Achim Steiner, administrator of the United Nations Development Programme (UNDP), and Hiroshi Matano, executive vice president of the Multilateral Investment Guarantee Agency (MIGA) of World Bank Group, wrote.
"This was plain to see in 2022: everything from devastating droughts in the Horn of Africa that precipitated hunger and famine to overwhelming floods in Pakistan that are pushing millions of people into poverty.”
On average, the world’s low-income countries lose $29bn every year from disasters yet just 3% of these losses are covered by insurance, they noted.
The IDF is mobilising the partnerships, resources, and expertise to fill this gap and contribute to the Insuresilience Global Partnership goal of providing financial protection for 500 million poor and vulnerable people against climate and disaster risks by 2025.
The 2022 report demonstrates “the power of trust”, Liès, Steiner and Matano said, as highlighted at the IDF Summit in June and COP27 in November. Three further sovereign risk transfer projects were launched as part of the Tripartite Agreement between the IDF, the German Federal Ministry for Economic Cooperation and Development (BMZ) and the United Nations Development Programme (UNDP). The first 20 Tripartite projects are projected to benefit more than 80 million people, if implemented as planned.
There was also significant operational progress, they said, in the pioneering Global Risk Modelling Alliance, which aims to allow countries to gain new access to climate and disaster risk insights through new risk management tools, data and access to operational risk finance expertise.
Momentum was also achieved last year, they added, with the Global Resilience Index Initiative, which aims to deliver the next generation of analytics to model the impacts of climate change across systems and supply chains, helping to define the asset level that is required for climate disclosure and risk management for the first time.
“Only through the three pillars of implementation, engagement and advocacy can the IDF consolidate and deliver on our operational priorities, deepen, and expand our engagement and influence across public and private sectors, and strengthen the convergence between insurance and disaster risk management and its contribution to society,” Liès, Steiner and Matano said.
The IDF is now a key vehicle to help ensure the extension of these affordable solutions “as essential investments in key global public goods”, they said, to the world’s poorest and most vulnerable communities.
“We can only respond to climate change’s universal risk if we act in concert as a global community with urgency and at scale,” Liès, Steiner and Matano said.
Practical initiatives being led by the IDF’s 100 institutional members span 22 countries and 29 projects. They include 20 re/insurance companies and brokers co-investing, financing and contributing technical capabilities to IDF programmes.
There is $2.2bn in expected or offered risk capacity under the IDF, BMZ and UNDP Tripartite programme.