Approximately 5,000 households in Fiji that are vulnerable to climate change will gain access to climate risk insurance products through a new partnership involving the Reserve Bank of Fiji (RBF), SUN Insurance Company Ltd, Tower Insurance, and the Germany-funded InsuResilience Solutions Fund (ISF).
The collaboration will introduce parametric insurance coverage aimed at providing financial protection against the negative impacts of climate-related events. This initiative seeks to facilitate quicker recovery in the face of disasters and to enhance the long-term financial resilience of these vulnerable households.
RBF Governor Ariff Ali expressed enthusiasm for the project, noting that it follows the recognition the bank received with the Nestor Espenilla Jr Financial Inclusion Innovation Award at the recent 2024 Alliance for Financial Inclusion (AFI) Global Policy Forum Awards. This accolade highlights the successful deployment of existing parametric insurance products, which the RBF now aims to broaden.
This program is in line with the National Financial Inclusion Strategy 2022-2030, focusing on empowering Fijians to create resilient and sustainable livelihoods through financial inclusion.
Parametric insurance is structured to provide quick payouts based on specific weather conditions, such as rainfall or wind speed, ensuring timely financial assistance when it is needed most and aiding in rapid recovery.
Tarlochan Singh, principal officer at SUN Insurance, remarked on the importance of making climate risk insurance accessible and effective for those who need it most, emphasizing that this will help safeguard their livelihoods and businesses against the unpredictable effects of climate change.
Joseph Magnus, the country manager for Tower Insurance, mentioned that Tower has been dedicated to protecting Fijian communities for 150 years. He stated that with the introduction of parametric insurance and the new partnership, they are enhancing insurance awareness and accessibility for an even greater number of Fijians.
The InsuResilience Solutions Fund, part of the InsuResilience Global Partnership and financed by the German development bank KfW on behalf of the Federal Ministry for Economic Cooperation and Development, is managed by the Frankfurt School of Finance & Management. The fund aims to foster the development of innovative climate risk insurance products and improve insurance markets to bolster the resilience of vulnerable households against climate change and natural disasters.
The initiative, titled “Introducing New and Scaling Up Existing Climate Risk Parametric Insurance Products in Fiji,” is set to last for two years, starting from August 1, 2024. It will involve collaboration with various demand-side partners, including the Fiji Crop and Livestock Council and The Sugar Cane Growers Council.