COP26: IDF and V20 announce partnership in risk understanding to build global resilience to climate risk; IDF announces other multi-partner resilience actions

Source(s)
Insurance Development Forum

Today at COP26, the Insurance Development Forum (IDF) announces three major programmes to connect the insurance sector’s world-leading risk assessment capability to the challenges of building resilience to climate change.  

In collaboration with its partners across the public, private, academic and humanitarian sectors, the IDF announces: 

  1. The signing of an agreement between the IDF and the Vulnerable 20 Group of Ministers of Finance for 48 climate-vulnerable countries (V20) to build risk analytics capability where it is needed the most. Through the use of these insurance-based methodologies, tools and experience, countries will be able to develop greater local ownership of risk analysis, which is an essential foundation for mainstreaming climate and disaster risk finance.The signing paves the way for the creation of a global public-private partnership programme, to be known as the Global Risk Modelling Alliance (GRMA). The GRMA will deliver this improved capability through partnership with sovereigns and sub-sovereigns. It follows the 1st Climate Vulnerable Summit, which took place in July 2021, where the V20 Ministers of Finance emphasised the need to harness the strengths of both private and public sectors in risk and resilience understanding, as aligned with the InsuResilience  Vision 2025.The GRMA programme will offer three elements: i. Open-source technology and standards, provided by industry and optimised for public-sector use cases; ii. A public good fund to help countries fill model and data gaps (to be resourced by donors); and iii. A technical assistance team of public and private sector practitioners to work with countries on applied projects (to be jointly resourced by donors and the insurance  industry). The GRMA will apply open data standards throughout, enabling countries to build, share and further develop risk views across ministries, disaster risk management authorities and research institutions. Through the IDF, industry has already committed funds and technology to this programme and is further developing the Oasis open risk modelling  platform for public sector and humanitarian use cases.
  2. The second commitment made by the IDF is the joint establishment of the Global Resilience Index Initiative (GRII), a multi-partner* initiative due to be formally announced during the COP26 Adaptation Day on 8th November. Patrons of the GRII initiative are Mark Carney, UN Special Envoy on Climate Action and Finance; Mami Mizutori, Assistant Secretary-General and Special Representative of the Secretary-General for Disaster Risk Reduction in the United Nations Office for Disaster Risk Reduction (UNDRR); and Eric Andersen, President Aon Corporation, Member and Risk Modelling Champion IDF Steering Committee. With partial funding and in-kind contributions from the insurance sector, the GRII will provide a globally consistent model for the assessment of resilience across all sectors and geographies. It will be a curated, open-source resource offering high-level metrics across the built environment, infrastructure, agriculture and societal exposures, with many potential applications in aggregated risk management worldwide.
  3. These commitments sit alongside the IDF’s increasing support to the humanitarian sector, notably a growing partnership with the Start Network. The IDF announces today its support for Start Ready, a new humanitarian financing facility, which is launching at COP26. This facility aims to help communities get ahead of escalating climate risks through pre-arranged disaster risk financing. Specifically, the IDF is providing expertise on using techniques such as risk pooling, to ensure that funding organised ahead of crises can be stretched to protect more people. The IDF has put forward experts from the insurance industry to support Start Network’s members, who will initially be building ‘anticipatory finance’ mechanisms in eight countries.

H.E. Fatima Yasmin, Secretary, Economic Relations Division, Ministry of Finance, People‘s Republic of Bangladesh, V20 Presidency, said:

“While analytics points to the fact that resources are not correlating to where science and practice indicates vulnerability is located, the Global Public Private Partnership on Risk Analytics and Resilience as called for by the 1st Climate Vulnerables’ Finance Summit Communique is a great opportunity to become more effective. 

Effective risk management to protect the prosperity of our people means to protect and future-proof our economies. We need to protect our asset base and logistics infrastructure to make sure we can secure our supply chains and price stability. For that, we need creative and decisive collaboration across domestic and international institutions for better access to existing data and models as well as more and regional and sectoral detail. Equally important, we need to make sure that these improvements integrate locally-led research and financing. This will be crucial to drive investment and close the financial protection gap in the V20 by mainstreaming risk management across our government, economy and community.”

Denis Duverne, AXA Group and Insurance Development Forum Chairman, said:

“As an industry, we have consistently recognised that climate change is the biggest challenge of our time. A fundamental pillar of addressing it will be greater access to climate risk information, tools and standards, as well as benchmark metrics that will shed light on the climate risks of today and on future impacts.  

We are proud to work with the V20 for the GRMA, and with our partners in the GRII, to drive a major step-change in the effort to open up access to climate risk understanding. 

The announcements made today are testament to the power that collective action can have in the effort to build resilience to climate change. IDF members are committing funds, technology and expertise to provide tangible benefits to countries and populations vulnerable to climate change. This will be a crucial support to resilience and adaptation efforts and ultimately it will define what a climate-resilient future must look like.” 

Dr. Maria Flachsbarth, Parliamentary State Secretary, German Federal Ministry for Economic Cooperation and Development, said: 

“We are on the cusp of a long-awaited breakthrough in shared risk understanding and quantification, and, ultimately, enhanced resilience for vulnerable people. This is a critical contribution to reaching Vision 2025 of the InsuResilience Global Partnership, to which Germany  is strongly committed with a view to enhancing protection from climate impacts. I therefore very much welcome today’s partnership announcement between IDF and the V20.” 

Ian Branagan, Group Risk Chief Officer, RenaissanceRe and Co-Chair of the IDF Risk Modelling Working Group, commented: 

“The ability to quantify, prioritise and price climate risk is an indispensable foundation for sovereign risk strategies. Improved risk analysis and understanding in V20 countries opens the door to resilient investment and can reduce the burden on governments by transferring risks to capital and insurance markets that have the capacity and expertise to better bear them. It also enhances risk management, disaster preparedness and crisis response programmes which prioritise early action and protect vulnerable populations.” 

Christina Bennett, CEO of Start Network, a global network of more than 50 humanitarian agencies, also welcomed these developments, stating: 

“The time for talking is over – action is required now, on the ground, for the vulnerable communities that need it the most. The climate crisis is a shared crisis, and we have a shared responsibility to act.  

The IDF’s commitment to delivering concrete action for risk understanding is impressive. We  are delighted about our partnership, which will see the insurance industry, through the IDF,  providing technical assistance and risk management software to Start Ready, a new  humanitarian financial service that Start Network is launching at COP26, aiming to help  communities get ahead of escalating climate-related risks through pre-arranged finance.” 

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