A public-private partnership project has been launched to scale up disaster risk financing and insurance solutions and to develop financial resilience.
The "Insurance and Risk Finance Facility (IRFF)" aims to build public assets and stakeholder capacities to improve the authorities' capacity to respond to flood events. It places particular emphasis on the restoration of economic activity in underprivileged and vulnerable communities.
The United Nations Development Program (UNDP), the German Federal Ministry for Economic Cooperation (BMZ), Insurance Development Forum (IDF) members Allianz and Swiss Re, and ten international insurance and reinsurance companies signed a Tripartite Agreement in 2019 at the UN Secretary General's Climate Action Summit.
Sukkrob Khoshmukhamedov, the UNDP Ghana's Deputy Resident Representative, who launched the project yesterday, stated that it will facilitate and make risk financing and insurance easily accessible to support the development of a resilient society for the accomplishment of the Sustainable Development Goals (SDGs).
He explained that as climate change's effects and shortcomings in the frameworks for planning, funding, infrastructure development, and inter-sectoral coordination worsened, disaster risks were on the rise.
While disaster risks were rising, he claimed that there was a significant protection gap in developing nations, where less than 5% of disaster losses were covered by insurance compared to 50% in high-income nations.
gap in protection
According to estimates, there are at least four billion potential customers for inclusive insurance alone, creating an enormous safety gap.
Therefore, expanding affordable access to insurance and risk financing is essential for achieving the SDGs and minimising the negative effects of weather- and climate-related disasters on development.
As regulators of the insurance sector, emerging risks like climate change are concerning, according to Kofi Andoh, the deputy insurance commissioner. This is because there are areas in Accra where some insurance companies are very hesitant to provide coverage to those who work or live there.
He asserted that in order to close the protection gap, the problem required an immediate solution.
"In 2021, Ghana passed a new Insurance Act that includes provisions to assist close the protection gap, reach out to the weak and unreached, and promote the use of contemporary technology.
climate adaptability
Ababacar Diaw, Chief Executive Officer (CEO) of Allianz Ghana, stated in a speech read on his behalf that the project made a significant contribution to Ghana's growing climate resilience.
In all phases of the disaster risk management cycle, rapid and predictable pay-out play a key role in significantly reducing the fiscal impacts of shocks, according to the author.
"Insurance as an innovative financial instrument holds immense potential to strengthen disaster and climate risk management risk strategies such that it tackles residual risks and minimises food impacts," he said.
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