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Partnerships for financing climate risk protection in Viet Nam

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High-level inter-ministerial workshop held in Hanoi June 6-7, 2017 hosted by the Ministry of Agricultural Development (MARD) of Viet Nam and supported under the Integrating Agriculture in National Adaptation Plans (NAP-Ag) Programme. The meeting was attended by over 75 national and provincial level government officials, including MONRE, MARD, MPI and the Ministry of Finance (MOF), UN and development partners, private sector representatives including insurance companies, as well as non-governmental organisations.

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Partnerships for financing climate risk protection in Viet Nam

  1. 1. DEVELOPING MULTI-STAKEHOLDER PARTNERSHIPS FOR FINANCING CLIMATE RISK PROTECTION DR. ANTONIS MALAGARDIS, GIZ Inter-ministerial technical workshop on valuation of climate change impacts in Viet Nam 6-7 June, 2017 Hanoi Club Hotel
  2. 2. 1. The InsuResilience Initiative 2. InsuResilience Components 3. Insurance in the Risk Continuum 4. Direct and Indirect Insurance 5. Microinsurance response to NatCat
  3. 3. Insurance in the Risk Continuum
  4. 4. Insurance in the Risk Continuum Level of Risk Prevention and Risk Avoidance (“Adaptation measures”) Risk Retention Risk Transfer e.g. Insurance Additional Measures NAP & Adaptation Policies
  5. 5. The InsuResilience Initiative
  6. 6. Map: Munich Re 2013 InsuResilience delivers! Goal: additional 400 Mio. poor and vulnerable people are insured by 2020
  7. 7. Strengthening indirect insurance facilities
  8. 8. Current programmes reach out to different regions in the world at macro level African Risk Capacity (ARC) • Drought insurance for members of the AU in combination with early warning systems and contingency planning • Currently expanding to new countries • New insurance products to cover floods and tropical cyclones under development Pacific Catastrophe Risk Insurance Facility (PCRAFI) • Insurance scheme covering tropical cyclones and earthquakes in Pacific Island Countries (PICs) • Founded by G7 partners GER, JAP, UK and USA together with World Bank and PICs Africa Pacific Caribbean and Central American Catastrophe Risk Insurance Facility (CCRIF) • Insurance scheme covering tropical cyclones and earthquakes in Caribbean small island states • Currently expanding to Central America • New insurance products to cover excess rainfall and cyclones under development Carri- bean
  9. 9. Strengthening direct insurance schemes
  10. 10. Activities of InsuResilience Direct catastrophic insurance coverage combined with conditional cash transfer systems for people living in rural areas Develop scalable weather risk insurance by using Indian MFIs and/or brokers as a distribution channel Scaling weather index-based insurance within a contract farming business model for people working in agriculture Development of direct climate risk insurance solutions based on satellite-based technology for selected Asian countries Implementation of pilot schemes for direct climate risk insurance Sambia Indien Paraguay
  11. 11. Main activities • Bundle product, i.e. NatCat cover, savings component, and basic health insurance • Perils insured (intended): drought, flood, cyclone, and possibly earthquake • Important features: not linked to a loan; cover against asset losses and income losses Product Selling proposition • Achieve and safeguard your life goals (e.g. house construction, education) while being protected against short-term difficulties like illness and natural catastrophes • Savings component serves customer life goals while basic health and NatCat insurance make customer more resilient • Predominantly very small business owners and labourers, and to some extent small famers • Mix of customer profile might differ from region to region in India • Customers were located in rural and urban areas Customer • Financial Inclusion Platform IFMR • 100+ partner originators of IFMR Holdings • In total, about 21 million customers are served by this network of partner originators Sales channel • WRMS (Weather Risk Management Services Private Limited) – designs, negotiates, and places the parametric index insurance cover in the insurance and reinsurance market • Climate group of GIZ India (Sabine Preuss) Key partners • Convince interested primary insurers and Indian regulator about product concept • Test bundle product in Tamil Nadu in Q3 2017 Next steps InsuResilience GIZ projects – Focus on India
  12. 12. Main activities • Weather index insurance (WII) bundled with life (funeral costs) insurance and farming inputs • Risks insured for cotton WII: drought conditions, late onset of rains, dry spells, excess rainfall • Data: TAMSAT satellite data on a decadal basis • Contract farming operator NWK AgriServices pre-finances premium upfront and recovers from the farmers at the end of the season • Premium is K30 ($3) for coverage of K300 ($30) for WII and K1,000 ($100) for funeral cover • No subsidies paid by donor or government Product • Workshop on WII in mid-July with cotton contract farming operators • Workshop on WII in mid-July with governmentNext steps • Insurance should incentivize farmers to reduce side-selling and increase deliveries • Replication of NWK insurance scheme with other cotton contract farming operators • Scaling up of WII through government farmer input support programme (FISP) Aim • Product has been offered for the last four seasons • 51,827 out of ~70,000 NWK contract farmers opted for insurance in the 2015/2016 season • Over 2013-2016: 61,446 farmers insured. 27,610 farmers received payouts • Another cotton ginner (Alliance Ginneries) has adopted the product Results • Sales Channel: NWK AgriServices contract farming operator • Broker: Risk Shield Consultants Limited • GIZ Zambia Key partners InsuResilience GIZ projects – Focus on Zambia
  13. 13. Progress of micro insurance in selected countries in Asia
  14. 14. Developing multi-stakeholder partnership for financing climate risk protection Dr. Antonis Malagardis, GIZ Inter-ministerial technical workshop on valuation of climate change impacts in Vietnam 6-7 June 2017 Ha Noi
  15. 15. Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI Asia) www.inclusiveinsuranceasia.com Microinsurance works as an effective response to ex-post natcat event
  16. 16. 16 Mio people affected 6,300 recorded casualties 4.1 Mio people displaced Calamity claims: 98% of total pay- outs Average claims pay-out USD108 Claims rejection rate 4.4% 13.7% of casualties had Microinsurance 111,000 claims, USD12 Mio payouts Source: Study of effectiveness of microinsurance service providers’ response to Typhoon Haiyan in the Philippines’, commissioned by GIZ-RFPI Asia and Microinsurance Network, 2014 Key Results of Response after Typhoon Haiyan in Philippines
  17. 17. Source: GIZ RFPI Asia A complex natcat environment needs a comprehensive approach in identifying DRF options for SMEs Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI Asia) www.inclusiveinsuranceasia.com
  18. 18. GIZ RFPI Asia (Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia ) is a regional program that supports Asian insurance supervisory authorities to enhance the enabling conditions for pro-poor insurance. Regional and global exchanges between insurance supervisors are being promoted through training and dialogue events. RFPI is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ). www.inclusiveinsuranceasia.com Mutual Exchange Forum on Inclusive Insurance (MEFIN) is a Network of insurance regulatory authorities in Asia working for a peer-to- peer exchange of knowledge and experiences with the insurance industry. The Network implement programs that provide mutual benefit to the members in advancing inclusive insurance solutions especially targeted for the low income and the informal sectors. www.mefin.org Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI Asia) www.inclusiveinsuranceasia.com
  19. 19. Thank you! Get in touch with us: Secretariat InsuResilience c/o GIZ – Deutsche Gesellschaft für internationale Zusammenarbeit Bonn, Germany InsuResilience@giz.de

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