The Insurance Development Forum (IDF), a partnership backed by the World Bank and the United Nations, is planning to establish an infrastructure fund worth hundreds of millions of dollars to assist developing countries in adapting to the impacts of climate change. The fund will support the development and implementation of climate-resilient infrastructure projects, including early warning systems, flood defences, and drought-resistant crops. It will also offer insurance coverage to protect these projects from financial losses resulting from climate-related events.
Ekhosuehi Iyahen, the Secretary-General of the IDF, highlighted the urgency of helping countries that are already experiencing the effects of climate change. The fund’s objective is to finance resilient and sustainable infrastructure in emerging and developing economies.
The chair of the IDF’s steering committee and Zurich Insurance Group, Michel Liès, emphasised the importance of investing in prevention measures to mitigate the impact of climate change rather than waiting for disasters to occur. He stated that the insurance industry, with its expertise in risk modelling and pricing, could bring neutrality and objectivity to the climate discussion.
The IDF, launched at the Paris Climate Summit in 2015, has a diverse membership that includes insurers, reinsurers, insurance brokers, regulators, and international institutions. As greenhouse gas emissions continue to rise, experts suggest that the chances of limiting global temperature increases to 1.5°C above pre-industrial levels are dwindling, making funding for adaptation measures increasingly important.
The question of how to fund adaptation to extreme weather events and widespread changes in land and building usage has gained more attention. Discussions about a “loss and damage” fund to help poorer countries impacted by climate change have faced challenges, as some higher-income countries have been hesitant to contribute to the fund. International financing institutions and donor countries have focused on targeted projects to enhance the resilience of countries vulnerable to climate disasters.
For example, the World Bank has incorporated repayment pauses and catastrophe insurance into new loans for its most vulnerable borrowers, allowing them to access emergency relief funds more quickly. Similarly, the Global Shield Solutions Platform, a multi-donor insurance fund, has begun offering pre-arranged finance to vulnerable countries that can be disbursed before or just after disasters occur.