Insurance Development Forum announces plans to facilitate investments in resilient infrastructure in developing/emerging markets

Source(s): Insurance Development Forum
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Insurer-led organisation seeks to drive greater mobilisation of insurance sector capital and more impactful insurance sector investments into resilient infrastructure in emerging and developing economies.

The Insurance Development Forum (IDF) announced today plans to facilitate insurance sector investments in resilient infrastructure that will enhance the resilience of vulnerable communities in emerging and developing economies to risks from climate change and other natural disasters.

Over the last 12 months, the IDF Infrastructure Task Force has developed a blueprint designed as a catalyst for driving greater mobilisation and more impactful insurance sector investment in a critical, underserved segment of the infrastructure market. This blueprint seeks to create a pipeline of infrastructure projects that match insurance sector investment requirements. The blueprint, which has been developed by leading IDF insurance company members, is strongly aligned with the purpose of the IDF and its objective to optimise and extend the use of insurance and its related risk management and financial capabilities to build greater resilience to climate change risks and other natural disasters. 

The blueprint is aimed at mobilizing insurance industry investments into the development of smaller to mid-size commercial infrastructure projects in developing and emerging markets. This includes investing in a diversified portfolio of greenfield and brownfield commercial infrastructure projects in sectors such as renewable energy, water, waste, transportation, social (e.g., hospitals, education and government-backed housing), digital infrastructure and telecommunication, as well nature-based solutions geared towards enhancing the resilience of vulnerable communities in emerging and developing economies to risks specifically from climate change and other natural disasters. Investments will be made through senior and mezzanine secured debt with a credit profile that is compatible with the requirements of the global insurance industry. The blueprint reflects the need to partner with DFIs and other credit enhancement providers to create new innovative investment structures that meet the credit quality requirements for insurer investments.

Through exploring innovative structures, the IDF’s ultimate aim is to provide a replicable, scalable solution for resilient infrastructure projects that can come to market quickly and thereby lead to near term measurable positive outcomes for the resilience of vulnerable communities. In doing so, the IDF’s blueprint calls for utilizing tools based on the significant risk analytical capabilities of the insurance industry in defining the resilience of investments and communities. 

The IDF is working with BlackRock to put its blueprint into action, leveraging the global asset manager’s significant infrastructure investment and blended finance expertise and familiarity with insurance industry investment requirements. BlackRock has a long track record of investing in diversified infrastructure globally, including social, digital, and transition-related infrastructure. 

Michel Liès, chair of the IDF Steering Committee, said:

“The Insurance Development Forum is today issuing an unprecedented call to action to the global re/insurance sector to support the investment in resilient and sustainable infrastructure in vulnerable communities. COP28 highlighted the urgent need to scale up the financing for resilient infrastructure. The blueprint was designed by insurers with our specific investment needs in mind. We see this as essential for companies’ and countries’ long-term sustainability, and the effective mobilisation of insurance industry capital towards a much-underserved segment of the infrastructure market in emerging and developing countries. 

We are delighted with the support that our blueprint has already attracted from the core IDF industry membership and that we are able to count on the significant expertise of BlackRock to deliver the meaningful impact we want to have on individuals, communities and businesses in countries which are particularly vulnerable to the impacts of climate change and other disasters.” 

Philipp Hildebrand, Vice Chairman of BlackRock, said:

“BlackRock is delighted to partner with a group of our most strategic insurance investors to help advance their objective of building greater resilience against climate change and other natural disasters in emerging markets.”

Charles Hatami, Global Head of the Financial and Strategic Investor Group at BlackRock, added:

“With developing nations facing a significant shortfall in the capital they need to build resiliency and to support a low-carbon transition in their economies, we see innovative solutions, such as public-private partnerships and blended finance structures, as important tools for mobilising greater private capital into these markets. We look forward to jointly exploring with the IDF ways to evolve the investment universe for blended finance beyond equities and into debt, in a way that meets the specific needs of insurers and delivers attractive risk-adjusted returns along with positive measurable outcomes.”

Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, said: 

“The IDF is proud to be at the vanguard of this important work, demonstrating in material terms the value of the insurance sector to the wider global community. We believe we can provide a practical contribution towards bridging the funding gap in emerging markets’ infrastructure which is estimated at USD 1.3 trillion. 

I am convinced that our blueprint will constitute an efficient answer to some of the needs climate-vulnerable emerging and developing countries are facing. It will also show the concrete commitment of a number of financial institutions to resilient infrastructure and further strengthen the IDF’s track record of delivering results that can inform longer term structural shifts in global resilience.”

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