Approximately 5,000 households in Fiji that are vulnerable to climate impact will have access to climate risk insurance products through a collaboration involving the Reserve Bank of Fiji (RBF), SUN Insurance Company Ltd, Tower Insurance, and the Germany-funded InsuResilience Solutions Fund (ISF).
This partnership will introduce parametric insurance, which offers financial protection against the negative consequences of climate-related events. The goal is to enable a quicker and more effective recovery while fostering long-term financial resilience for these at-risk households.
RBF governor Ariff Ali expressed enthusiasm for the project, highlighting its launch following the RBF’s receipt of the prestigious Nestor Espenilla Jr Financial Inclusion Innovation award at the recent 2024 Alliance for Financial Inclusion Global Policy Forum Awards. He noted that the award reflects the successful implementation and impact of existing parametric insurance products and aims to expand these efforts.
This initiative aligns with the National Financial Inclusion Strategy 2022-2030, aimed at empowering Fijians to develop resilient and sustainable livelihoods and businesses through financial inclusion.
Parametric insurance is designed for quick payouts based on predetermined weather conditions, such as specific rainfall amounts or wind speeds. This ensures timely financial assistance during critical moments, promoting rapid recovery.
Tarlochan Singh, principal officer at SUN Insurance, expressed excitement about the collaboration, stating the aim is to make climate risk insurance accessible and effective for those most in need, protecting their livelihoods and businesses from climate uncertainties.
Joseph Magnus, country manager for Tower, mentioned Tower’s 150-year history of supporting Fijian communities with insurance. He emphasized that the introduction of parametric insurance and this new partnership is focused on raising awareness, accessibility, and penetration of insurance for more Fijians.
The ISF, an operational program of the InsuResilience Global Partnership, is backed by the German development bank KfW on behalf of the Federal Ministry for Economic Cooperation and Development and is managed by the Frankfurt School of Finance & Management. This initiative aims to foster the development of innovative and sustainable climate risk insurance products and markets, enhancing the resilience of vulnerable households against climate change and natural disasters.
The joint project, titled “Introducing New and Scaling Up Existing Climate Risk Parametric Insurance Products in Fiji,” will operate for two years starting August 1, 2024, and will involve partnerships with organizations such as the Fiji Crop and Livestock Council and the Sugar Cane Growers Council.