New York :The United Nations Development Programme (UNDP) today announced a new flagship initiative — the Insurance and Risk Finance Facility (IRFF), within its Finance Sector Hub. The Facility will strengthen the protection of vulnerable communities from socio-economic, climate and health-related disasters, by significantly increasing the role of insurance and risk-financing in development.
The German Government has contributed 35 million in funding for the Facility to advance delivery of the InsuResilience Global Partnership’s Vision 2025, which was presented at the UN Climate Action Summit 2019.
Disaster recovery costs the world’s 77 poorest countries an average of USD29 billion annually – with only 3% of this cost covered by insurance, forcing countries to bear the cost of recovery themselves or rely on humanitarian aid. In 2020 alone, 980 disasters caused by natural hazards cost the global economy over USD210 billion. Following the COVID-19 crisis, 150 million people have been pushed back into poverty.
Insurance and risk financing provide a critical safety net, protecting assets, lives and livelihoods from the impact of crises. The IRFF will be present across five regions globally, working with the insurance industry and government to transform markets. The ambition is to co-create insurance and risk finance solutions in over 50 developing countries by 2025, embed them in public financial decision-making, and greatly contribute to the InsuResilience Vision 2025 target of protecting 500 million poor and vulnerable people by 2025.
“Building the financial resilience of countries and communities is a critical element of tackling climate change and safeguarding past and future development gains. Germany is strongly committed to the InsuResilience Global Partnership to enhance protection from climate impacts.
Risk finance and insurance solutions enable the delivery of effective disaster response and help countries to be better prepared for the impacts of climate change and other shocks by reducing humanitarian impacts, building people’s capacity to recover more quickly and strengthening community resilience.
“In 2020 alone, more than 200 projects in over 100 countries contributed to the InsuResilience Global Partnership, protecting an additional 137 million people”, says Dr. Maria Flachsbarth, Parliamentary State Secretary, German Federal Ministry for Economic Cooperation and Development (BMZ).
Under the IRFF, UNDP will be driving the country level change by working with governments to include climate risk modelling work in National Development Plans and Financing Strategies, Nationally Determined Contributions, National Adaptation plans and more.