The launch of a risk and resilience analytics partnership between the Insurance Development Forum (IDF) and the Vulnerable 20 (V20) ministers of finance at COP26 will represent a critical pillar in addressing the protection gap challenge, according to IDF secretary general Ekhosuehi Iyahen.
The partnership is one of several IDF initiatives set to formally launch at the event, alongside plans for a Global Resilience Index and a Global Risk Modelling Alliance.
Iyahen told The Insurer the IDF’s focus on risk analytics was directly linked to finding ways to address the challenge of financing adaptation.
“V20 countries have been clear that the protection gap is an issue and one that is continuing to widen,” she said, citing a communique issued by the V20 in July on the issue.
“Our approach as the IDF is to create a platform where the industry, working with the public sector, can tackle these issues in a practical and constructive way that allows us to move from the halls of discussion to practical implementation.
“This approach is focused on bringing transparency to the challenges faced by many countries with the goal of starting to unpack what adaptation and resilience investments should look like, helping to drive capital in that direction.”
Vulnerable countries were dealt a further blow ahead of this year’s talks when it emerged the pledge for developed countries to provide $100bn in annual climate finance to the developing world would not now be reached until 2023.
Iyahen said COP26 will likely see clear statements calling on developed countries to deliver on this promise for adaptation finance.
“The expectation is that this must include building new markets for adaptation and mitigation and improving the quantity, quality and access to finance to support communities around the world to take action on the changing climate,” she said.
“The OECD estimates that $79.6bn of climate finance was mobilised in 2019 but there are still significant gaps. The longer it takes to mobilise financing for adaptation, the worse it will get for those countries who are already bearing the brunt of the impact of climate change.”
Alongside the risk and analytics partnership, the event will see the IDF launch the Global Resilience Index, a key feature of its engagement with the COP26 Private Finance Hub under the leadership of Mark Carney.
“We believe that these developments are particularly crucial in the ongoing discussions around resilience and adaptation at COP26,” she said.
The event will also see the launch of a Global Risk Modelling Alliance, with Iyahen having revealed earlier this year the IDF was launching an “ambitious risk modelling agenda”.
“Within the IDF we have been working on the idea of how we improve underlying architecture to better support risk insights and standards,” she said.
“We have been working with the public sector to ensure that as we develop this we can help with better sharing of risk information so that we can talk from the same spreadsheet.”
In addition to the planned launch of its initiatives, Iyahen said a successful COP for the IDF is also about “contributing to engendering the trust that is needed at this time, a focus on the most vulnerable among us and on solutions and implementation”.
“This again speaks to the importance of our approach and partnership efforts on risk analytics as a trusted partner that countries and communities can work with and co-develop solutions.
“I also believe it goes to the roots of the industry and very real link to its social purpose and mandate of providing people with security and protection. If ever there was a time to reinforce this mandate and values, it would be now.
“Conversations around adaptation and resilience are fundamentally tied to the value proposition of insurance.”
From her own perspective, Iyahen said a successful COP would comprise both commitment to mobilise $100bn a year in climate finance as well as securing global net zero by the middle of the century and keeping the 1.5°C target within reach.
“This means countries coming forward with ambitious 2030 emissions reductions targets that align with reaching net zero by the middle of the century,” she said.
“Securing a successful outcome will not be an easy task. That said, there is a role and a space outside of that process and steps that can be taken by businesses, civil society actors and foundations in a positive direction in support of our common objectives.
“There is an element of fatigue when talking about what is needed,” she continued. ”It’s simply time to get on with it. A commitment to the risk analytics piece plays to the strengths of the industry at a time when it is needed.
“The commitments which we will announce also demonstrate a responsiveness to those who are on the frontline and a willingness to put resources to this endeavour. That is something noteworthy. In response, we expect to see some positive public sector support for this progressive move.”