RESPAC – Insurance based solutions for disaster resilience

Mother watching over child - Feroz KhalilCountry: Regional

Partner: Disaster Resilience in the Pacific Small Island States (RESPAC)

Date: Oct, 2017 – Oct, 2019

RESPAC Grant to PFIP:  USD 100k (2017), $250k (2018), USD $240K (2019)

Current reach: Refer to FijiCare Insurance Limited, Apia Insurance Company

 

 

 

Need:

There is a lack of mass market, affordable core insurance products in the Pacific that are weather related (e.g. cyclone covers and crop insurance schemes). 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. Overall there is a lack of insurance provider interest, appetite, resources and ability to develop and launch new products that meet the needs of the mass markets in these areas.

Greater insurance penetration will lead to greater levels of resilience. This is because insured persons and businesses will have additional resources from insurance claims settlements, that enable them to recover from incidents faster, and because they do not need to dispose of assets to raise finance following an event. Insured businesses have a higher capacity to maintain or to restart operations following a negative weather, accident or risk related event. This enables more employment to be maintained and more livelihoods to be supported.

 

Solution:

PFIP will partner with the Russian-Federation funded UNDP administered  Regional Disaster Resilience in the Pacific Small Island Developing States (RESPAC) Programme 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.

A key objective of the RESPAC programme is to build the resilience of individuals and communities against the negative effects of weather related events and impacts. One such coping strategy is the use of insurance. Insurance is a risk transfer mechanism that enables insurance policyholders or beneficiaries to cope with the costs of unexpected events and to gain a degree of protection for individuals, families, communities and businesses against the unexpected.

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.

 

Methodology:

To help address the market gaps and issues, PFIP will use its strategic instruments to deliver the projects and strive to provide solutions.

 

a)   Technical Assistance and Advisory

PFIP will engage private, public sector and other actors to encourage and support financial inclusion and resilience building activities. PFIP will fulfil its technical advisory role with policy makers and with providers of insurance.

 

b)   Human-centered design techniques and the Innovation Lab approach

PFIP will establish an Innovation Lab and use techniques from the Human Centered Design (HCD) industry to apply a structured approach to supporting innovation with both policy makers and providers.

Projects can be of three types:

  • Learn projects. Short projects that gather information to validate a more ambitious project idea and get information to formulate a solution.
  • Test projects.  Test projects are structured, time-bound efforts to validate whether a service has sufficient demand, and is operationally feasible and can be commercially scaled.
  • Scale phase projects are used for ambitious expansion of services that have passed the test phase.

The Innovation Lab projects will involve designing, prototyping, testing and scaling mass market insurance services.  Internal and external experts covering multiple technical, business and management disciplines will find the right combination of services, pricing and user interfaces that will customer to adopt formal financial services.

The Innovation Lab projects will involve designing, prototyping, testing and scaling mass market insurance services.  Internal and external experts covering multiple technical, business and management disciplines will find the right combination of services, pricing and user interfaces that will customer to adopt formal financial services.

 

c)   Performance Based Grants

PFIP awards grants to providers of financial services to offset startup costs, design and pilot new business models, distribution channels and products and services, and to scale up proven solutions.

 

About RESPAC

The Regional Disaster Resilience in the Pacific Small Island Developing States (RESPAC) is a Russian Federation-UNDP funded partnership that works with partners, the private sector and governments to strengthen climate early warning systems and climate monitoring capacity, enhance preparedness and planning mechanisms and tools to manage disaster recovery processes, and increase the use of financial instruments to manage and share disaster related risk and fund post disaster recovery efforts.