A framework has been unveiled today by the Prince of Wales’ Sustainable Markets Initiative Insurance Task Force which aims to form the basis for new public-private partnerships to help boost disaster resilience in low to middle income countries.
The framework highlights how insurers and investors can provide a blended finance solution for sovereigns that addresses both investment in adaptation to build resilience and the transfer of residual risk.
The study highlights the potential for multilateral development banks, international aid donor and the private sector to “partner to create large scale, repeatable, efficient and high impact physical, economic and humanitarian financing and risk mitigation solutions for climate-vulnerable developing countries”.
To pilot the framework, the SMI Insurance workstream said it was working with agencies in Kenya to develop means of bringing private sector resources to bear in support of more resilient agriculture across the country.
The initiatives being explored include a crop or livestock insurance mechanism tied to an impact investment bond, in which the government uses the principal to finance resilience initiatives among small holders.
Bruce Carnegie-Brown, chair of SMI Insurance Task Force and Lloyd’s, said: “The global insurance industry has a crucial role to play alongside private finance, international donors and sovereign agencies in addressing the needs of developing countries.
“This framework creates a vital opportunity for low- to middle-income countries to build resilience against increasingly frequent and severe weather risks, as well as driving sustainable societal and economic recovery post-disaster.”