Around 5,000 climate-vulnerable households in Fiji will receive climate risk insurance products through a collaboration involving the Reserve Bank of Fiji (RBF), SUN Insurance Company Ltd, Tower Insurance, and the Germany-backed InsuResilience Solutions Fund (ISF).
This partnership will offer parametric insurance coverage, which is designed to provide financial security against the negative impacts of climate-related events. This initiative aims to facilitate quicker recovery and increase the long-term financial resilience of these households.
RBF Governor Ariff Ali expressed enthusiasm about the project, highlighting its connection to the RBF’s recent recognition with the Nestor Espenilla Jr Financial Inclusion Innovation award during the 2024 Alliance for Financial Inclusion Global Policy Forum Awards. He noted that this award underscores the effective implementation and impact of existing parametric insurance products that the organization plans to expand.
The initiative aligns with the National Financial Inclusion Strategy 2022-2030, which seeks to empower Fijians in building resilient and sustainable livelihoods and businesses through enhanced financial inclusion.
Parametric insurance products are structured to provide swift payouts based on pre-defined weather conditions, such as specific rainfall levels or wind speeds, ensuring timely financial assistance when it is most critical and supporting rapid recovery.
Tarlochan Singh, principal officer at SUN Insurance, expressed excitement about the collaboration, stating that the aim is to make climate risk insurance accessible and effective for those who need it most, thereby protecting their livelihoods and businesses against climate uncertainties.
Joseph Magnus, Tower’s country manager, noted that the company has been safeguarding Fijian communities with insurance for 150 years. He emphasized that the introduction of parametric insurance through this partnership will enhance insurance awareness and accessibility for a wider range of Fijians.
The ISF, part of the InsuResilience Global Partnership, is funded 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. Its mission is to foster innovative and sustainable climate risk insurance products to bolster the resilience of vulnerable households facing the challenges of climate change and natural disasters.
The joint initiative, titled “Introducing New and Scaling Up Existing Climate Risk Parametric Insurance Products in Fiji,” is set to run for two years, starting August 1, 2024. This program will also engage with demand-side partners, including the Fiji Crop and Livestock Council and The Sugar Cane Growers Council.