A new partnership between two United Nations programmes is expected to yield innovative and cost-effective insurance solutions for Pacific Islanders and small businesses in the region.
The United Nations Development Programme’s (UNDP) Regional Disaster Resilience in the Pacific Small Island Developing States (RESPAC) Programme has delegated authority and financing to the Pacific Financial Inclusion Programme (PFIP) to set up an Inclusive Insurance Innovation Lab to conduct research, test concepts, design and prototype insurance products, launch tested products with insurance service providers and the business community to help address climate and disaster risks across the region.
The overall aim of the partnership is to work with Pacific policymakers and the insurance industry to develop affordable insurance protection to secure livelihoods and assets for Pacific Islanders.
The RESPAC project with an overall budget of US$ 7,500,000 has allocated a sum of USD 590,000 to PFIP to undertake activities over the next three years that will increase the use of inclusive insurance and other financial instruments to manage and share disaster related risk and fund post disaster recovery efforts.
UNDP Pacific Office in Fiji Country Director and Head of Pacific Regional Policy and Programme, Bakhodir Burkhanov said the UNDP firmly believes that achieving the Sustainable Development Goals (SDGs) requires deliberate, calculated investments in testing new ways of triggering change.
“Innovation for development is about identifying more effective solutions that add value for the people affected by development challenges. Pacific communities have growing vulnerabilities to natural hazards, climate change related risks and to other financial shocks,” he said.
“These events can remove development gains and erode resilience of communities and weaken business sectors. The RESPAC and PFIP partnership will develop insurance products that are not only affordable but will also help people to mitigate and manage risks, and protect assets,” he added.
RESPAC Programme Manager Noud Leenders said, “Greater insurance penetration will lead to greater levels of resilience. Having insurance will allow citizens and small businesses to recover faster. Insured businesses have a higher capacity to maintain or to restart operations following a negative weather, accident or risk related event. This enables employment to be maintained and more livelihoods to be supported”.
Acting PFIP Programme Manager Krishnan Narasimhan added that over the next three years PFIP will be working with insurance companies across the Pacific to explore, develop and supply accessible, affordable and suitable insurance products that can be used to deliver a faster, more predictable and cost-effective response, as part of a coping strategy.
He said that the Pacific currently lacked weather related insurance schemes, such as cyclone coverage for crops, and that PFIP was assisting the insurance industry to develop commercially viable and scalable business propositions to provide this sort of protection.
“There is also lack of suitable Small Medium Enterprise (SME) insurance products that are simple enough, sufficiently accessible and affordable to many informal and formal businesses.
In summary, this partnership between RESPAC and PFIP is a pioneering move in the region and focuses on developing new and better types of insurances that have the potential to bring thousands of people under the safety net of insurance for the first time.