With many government budgets still stretched in the aftermath of the Covid-19 pandemic, an increasing number of development actors are considering premium financing as a means of providing support to countries.
Premium financing has already enabled several countries to secure insurance coverage through facilities such as CCRIF and African Risk Capacity.
“The reality is that many countries are still reeling from the pandemic,” explains Insurance Development Forum secretary general Ekhosuehi Iyahen.
“Some of our members recognise and appreciate this. In the context of expressed demands from V20 countries to help address the protection gap, some of our public sector members have been actively considering principles to support the provision of premium and capital support to countries or programmes that may be interested in seeking insurance coverage but may not have the fiscal space to do so.
“This is quite remarkable when one considers that a few years ago this was never part of the discussion with donors,” she adds.
Iyahen says an increasing number of countries view premium financing as part of their climate finance commitment.
“Earlier in the year, the German Ministry of Foreign Affairs announced its commitment to shift 5 percent of its humanitarian financing to ex-ante.
“We expect to see a similar shift at even greater scale going forward and again echoing a more serious evaluation by donors on public spend, with a focus on effectiveness and efficiency in supporting those most in need.”
Iyahen said the shift toward premium financing was part of a rising awareness within the development community of the importance of ex-ante financing to better manage crises.
Iyahen is participating in a series of events throughout COP26, including the launch of several IDF initiatives at tomorrow’s Finance Day.