IDF Summit 2021: Insurance sector ramping up its critical role in accelerating global climate resilience
The June IDF Summit on the theme ‘Building Resilience in a Riskier World’ gathered global leaders in the lead up to COP26 in Glasgow, to discuss how insurers and the public sector can act together to build climate resilience.
The Insurance Development Forum (IDF) attracted over 1,000 delegates from across 90 countries to its IDF Summit 2021 Building Resilience in a Risker world: Actions towards a climate resilient future, which took place virtually on 7th – 8th June.
Global figures including the Managing Director of the International Monetary Fund, the President of the World Bank, and the UN Special Envoy for Climate Action and Finance joined leaders from the UN, international institutions, governments, humanitarians and leading international insurance brokers and carriers.
They debated how the global insurance industry and the public sector could further work together to understand and manage climate risk and its related challenges, to build resilience for those most vulnerable to the impacts of climate change.
These discussions were particularly timely ahead of the G7 meetings, the outcome of which saw insurance and risk management feature strongly in the G7 June 13th communique.
During the Summit leaders across all areas agreed that risk understanding and analytics are central to addressing climate risk. Dr Maria Flachsbarth, Parliamentary State Secretary at Germany’s Federal Ministry for Economic Cooperation and Development and Co-Chair of the InsuResilience Global Partnership, stressed how poor access to risk information is a barrier for countries to protect their hard-earned development gains and expressed a commitment to working with the insurance industry to leverage its expertise in this area.
The Summit also highlighted the systemic shift needed to move from ex-post to pre-arranged crisis financing, in order to drive anticipatory action to limit the impact of disasters, save lives and make more efficient use of limited resources. This approach includes better leveraging of insurers’ balance sheets to support a greater suite of ex-ante risk financing tools for governments.
A compelling statement was given by His Excellency Mr Alfred Alfred, Minister of Finance for the Marshall Islands and Co-Chair of the V20 group of finance ministers. He echoed the need for access to risk understanding, as well as concrete measures to address climate related risks, especially after the impact of the COVID-19 pandemic has stretched national budgets and increased their sovereign debt levels.
Responding to these sentiments, the IDF called on public sector partners to join a new initiative with the working title Global Risk Modelling Alliance (GRMA). It aims to enable vulnerable countries to access and own their risk information as the basis to shape national adaptation plans and risk management strategies, as well as direct finance to high priority areas to drive adaptation and greater resilience. The initiative, which already has financing commitments from the private sector, proposes:
- Free to use risk technology and open data standards
- A programme to fill risk model gaps for public good
- The support of a team of public and private sector risk experts to help define risk programmes and develop risk management capabilities.
During the IDF Summit, Chairman of AXA and the Insurance Development Forum Denis Duverne, said: “In the absence of adequate insurance, the burden of paying for disaster losses falls largely on citizens, governments, and aid organizations, with significant impact upon already-strained government budgets, and translating to economic and social hardship for those directly affected.”
He added: “This is why I was particularly pleased that Kristalina Georgieva, Managing Director of the IMF, as well as David Malpass, President of the World Bank Group, and Mark Carney, UN Special Envoy for Climate Action & Finance, joined the IDF Summit and shared with us the efforts of their respective institutions, insights into the kind of systemic change that is needed, and their perspectives on the role of insurance.”
The summit also showcased work by the IDF working groups as well as its members and partners, such as the Adrienne Arsht-Rockefeller Foundation Resilience Center’s work on addressing heat waves, the work by the newly formed Net Zero Insurance Alliance (NZIA), the Race to Resilience and considerations around the Just Transition.
Public and private sector speakers homed in on how the benefits and protection offered by innovative public-private partnership models, such as the IDF-UNDP-BMZ Tripartite Agreement to provide technical assistance and insurance solutions to 20 countries by 2025, must be scaled up even further to deliver resilience for communities.
Other high-level speakers commented as follows during the summit:
Chairman, Zurich Insurance Group & Deputy Chair of the IDF Steering Committee Michel Lies, said: “There are a lot of things that are possible now thanks to the IDF that were not possible for individual actors. Our shared goals and targets allow close collaboration in a way we have never seen before. We must be ambitious.”
Administrator, UNDP & Co-Chair of the IDF Steering Committee Achim Steiner, said: “We are truly at a moment where the future bears more uncertainty than ever. It is not risk avoidance, but risk management, that will be central to governments’ handling of the future. Citizens need to be empowered to manage their own risks too, and we need this partnership more than ever. Insurance and state of the art technology and analysis should not be the privilege of the most developed nations when it is, in a way, most relevant to the least developed.”
In closing the summit, UN Secretary-General, António Guterres underscored key themes of the conference, emphasising that in the “race to adapt to a rapidly changing climate, […] “as both insurers and investors, the insurance sector has a key role to play”.
He further commented: “People in the least developed countries are, on average, six times more likely to be injured, lose their homes, be displaced, evacuated or require emergency assistance, than those in high-income countries. Making insurance markets more inclusive in terms of countries, businesses and individuals is a core strategy for building safety nets. The development community must advocate for better integration of risk finance and insurance into country development planning and financing.”
IDF Secretary General Ekhosuehi Iyahen, said: “The insurance industry is committed to working with the public sector to accelerate efforts to drive the transition and climate resilience and the IDF will be part of ensuring that this happens.
“The recent communique from the G7 demonstrates an increasing appreciation for the important role that the insurance industry will need to play as part of the journey to Glasgow and beyond and is aligned with some fundamental principles of the Crisis Lookout Call to Action which the IDF strongly supports and calls for the world to (i) predict crises better, (ii) prepare response better and (iii) protect people better”