The Insurance Development Forum (IDF) and the Vulnerable Twenty (V20) Group of Ministers of Finance shared their joint vision to establish a global public private partnership on risk and resilience analytics, at a roundtable on the margins of the United Nations General Assembly with the theme “Strengthening Global Physical Climate Risk Management Capabilities”.
Special Envoy Mr. Abul Kalam Azad, of the CVF and V20 Presidency of the People’s Republic of Bangladesh, underscored the necessity to develop risk analytics based on country demand and built on “an inclusive process, commensurate with ground truths”. He also highlighted that Bangladesh’s comprehensive risk management and adaptation program in the Mujib Climate Prosperity Plan, “attempts to mobilize resources to secure reduced climate impacts”.
Acknowledging the V20’s earlier call for a global public-private partnership for risk analytics and resilience during the 1st V20 Climate Vulnerable’s Finance Summit in July 2021, AXA and IDF Chairman Denis Duverne highlighted the IDF’s call for donor country support to make climate risk analytics a public good, by forming a Global Risk Modelling Alliance (GRMA). He stated, “The effects of the climate crisis can only be addressed fairly if all sectors pool their resources and risk management expertise at global and local levels. We are honoured by the prospect of partnering with V20 members in bringing private sector capabilities to this important programme and call on G7 and G20 governments to join us.”
Aimed at providing vulnerable country governments with an open-access risk modelling platform and the knowledge to utilize the best of global and local models and data, the GRMA is designed to enable V20 members to strengthen their physical climate risk management capabilities and create the trust and confidence necessary to attract investment in adaptation and risk financing solutions.
The IDF and the V20 announced their intention to advance on the creation of the GRMA by COP26 in Glasgow and called on the G7 and the G20 to support this effort.
Special Envoy Azad also highlighted that, in order to complement the work of the GRMA, “the international community must help climate vulnerable countries to close the existing financial protection gap through climate smart insurance subsidies and capitalization support”.
The latest Intergovernmental Panel on Climate Change Assessment Report released in August 2021 now officially confirms that, due to inadequate emission reduction measures, the 1.5-degree limit of the Paris Agreement may be breached this decade. This spells physical, economic and social devastation for the world’s most climate vulnerable developing countries, including the 48 members of the V20.
In most V20 economies more than 98% of losses remain uninsured, leaving people and hard won development gains unprotected. At the same time, investments in quantifying, prioritizing and pricing climate risk are mainly concentrated in the Global North. Similarly, financial protection tools, such as disaster risk insurance, are least available and affordable in the Global South. This is, in no small part, due to a lack of access to the risk data and understanding necessary to build national disaster risk markets and support governments in making critical climate investment decisions.
Committing support towards the creation of the operationalization of the GRMA, smart premium and capital support and country-demand-led implementation initiatives could represent significant steps in the run-up to COP26 and beyond.
