The World Humanitarian Summit and the significance of climate insurance
Start Network’s Deirdre O'Sullivan-Winks discusses Start Network’s efforts to showcase the significance of climate insurance in reducing humanitarian need at the World Humanitarian Summit.
On 23 and 24 May, we had the unique opportunity, along with our key partners (The African Risk Capacity, GlobalAgRisk & The Insurance Development Forum) and other sector leaders, to discuss the significance of climate insurance in reducing humanitarian need. During two side events at the World Humanitarian Summit (WHS) in Istanbul we profiled the work we are doing in Start Labs to develop drought insurance mechanisms that will deliver better, faster, more effective financing.
I lead on developing new business models, such as insurance and loans, that address the different risks faced by humanitarian NGOs in their daily work.So for me, the chance to bring donor governments, civil society, multilateral organisations and insurance sector leaders together in the same room to talk about how as non-governmental organisations (NGOs) move from concepts to actions and embed the use of this financing tool in our everyday financing and risk management strategies, was very exciting and motivational.
The first session, “Reducing the Humanitarian Finance: The Power of Insurance, Forecast-Based Actions and Recovery Finance” was sponsored by the German Federal Ministry for Economic Cooperation and Development (BMZ) and the World Food Programme (WFP). Under their G7 presidency and as founding member of InsuResilience, the climate risk initiative to increase insurance coverage to an additional 400 million people by 2020, Germany’s Minister Gerd Müller emphasized that through climate insurance we can find the answers we need to reduce risk and increase resilience of the most vulnerable communities for the future.
Every voice in the room was aligned, from the Minister’s to Baroness Verma (Parliamentary Under Secretary of State for International Development, UK), Ertharin Cousin (WFP Executive Director), Dr. Till Wahnbaeck (CEO, Welthungerhilfe and The Start Network’s panel representative), Dr. Ngozi Okonjo-Iweala (ARC Agency Governing Board Chair), Dr. Johannes Richert (Deputy Secretary General, the German Red Cross) and Dr. Jerry Skees (President, GlobalAgRisk and Director, Global Parametrics) - insurance means earlier, faster, smarter financing and by working together across the private, government, multilateral and NGO sectors we can significantly increase the impact of new initiatives.
A key example of this was cited – Replica Insurance Coverage by the African Risk Capacity (ARC) where the Start Network and WFP are partnering with ARC to mirror African sovereign drought insurance policies, coordinate contingency planning between NGOs and governments, and expand insurance coverage to reach up to an additional 200 million people in Africa by 2020. The resounding support for Replica Coverage was extremely encouraging to see at this event. Dr. Skees also mentioned our joint initiative with his Research & Development firm GlobalAgRisk to create a drought insurance mechanism that will operate at the meso level – across Start Network members – and provide early financing against drought with a global scope and uniquely tailored to civil society needs.
Our second event was “Anticipating Crises, Reducing Risk, and Platforms for Sustainable Growth at the World Humanitarian Summit”. The event was organised and sponsored by the Insurance Development Forum (IDF), a public/private partnership led by the insurance industry, and supported by international organizations, to optimize and extend the use of insurance-related facilities to protect vulnerable populations and close the protection gap. With influential and leading members of the private, multilateral and non-governmental sectors on the panel, including our Director Sean Lowrie, the discussion at this event about where the gaps are and how the different actors involved can work together to plug these gaps was a fascinating topic.
Rowan Douglas CBE, Willis Towers Watson, founder of the IDF and Chair of the IDF Implementation Committee told the audience that insurance is the ultimate community product and that commercial insurers have the modelling, they have the capital but they lack the demand. Key messages were that together we need to explore the risks in more depth, ensure risks are transparent, focus on becoming a risk aware society, rather than simply creating risk management products together and through the IDF, align all insurance related initiatives and pool our collective strengths to deliver real results for climate resilience and sustainable growth targets. We at the Start Network are proud to be the official organising partner for civil society at the IDF!
There is resounding support across sectors and actors in the humanitarian space for the use of insurance to address the more predictable risks such as climate risk and thereby safeguard emergency funding reserves for those crises that we’ll never be able to predict. Multiple references were made to insurance in the High Level Roundtables and they were consistent in their core message, however I feel there are still significant hurdles to overcome if we are to truly ‘normalise’ the use of insurance as a disaster risk financing tool. For example,
- becoming comfortable with the concept itself in the humanitarian system (paying annual premiums for a mechanism that will not pay out every single year),
- using sometimes complex scientific data, not subjective assessments, to drive the triggers for financing,
- creating an enabling regulatory environment for new innovations to spring up and create fundamental change in our system,
- calling on donor governments and other funders to support the sustainability of insurance initiatives through multi-year premium payments
- and long-term support for innovations particularly, to create a solid evidence base for early action in the humanitarian sector.
I’m excited to see where the insurance commitments made at the WHS and our innovative partnerships in this space will take us.