Approximately 5,000 climate-vulnerable households in Fiji will gain access to climate risk insurance products through a collaboration between the Reserve Bank of Fiji (RBF), SUN Insurance Company Ltd, Tower Insurance, and the Germany-funded InsuResilience Solutions Fund (ISF).
This partnership will offer parametric insurance that aims to provide financial protection against the detrimental effects of climate-related events, facilitating quicker and more effective recovery and enhancing the long-term financial stability of these at-risk households.
RBF Governor Ariff Ali expressed enthusiasm about the project, which follows the RBF’s receipt of the Nestor Espenilla Jr Financial Inclusion Innovation Award at the recent 2024 Alliance for Financial Inclusion (AFI) Global Policy Forum Awards. He emphasized that this initiative reflects the successful implementation of existing parametric insurance products that the bank now seeks to expand.
The project aligns with the National Financial Inclusion Strategy 2022-2030, which aims to empower Fijians to create resilient and sustainable livelihoods through financial inclusion.
Parametric insurance is structured to enable rapid payouts based on predetermined weather-related conditions, such as rainfall or wind speed, ensuring timely financial aid precisely when it is necessary for recovery.
Tarlochan Singh, principal officer of SUN Insurance, highlighted the significance of the partnership, stating that their objective is to make climate risk insurance both accessible and effective for those most in need, thereby protecting their livelihoods and businesses against climate change uncertainties.
Joseph Magnus, country manager for Tower, noted that the company has a long history of protecting Fijian communities and expressed that this new collaboration will enhance insurance awareness, accessibility, and penetration among an even greater number of people in Fiji.
The ISF, an initiative of the InsuResilience Global Partnership, is financed by the German development bank KfW on behalf of the Federal Ministry for Economic Cooperation and Development and is overseen by the Frankfurt School of Finance & Management. It focuses on developing innovative and sustainable climate risk insurance products to enhance the resilience of vulnerable households facing climate change and natural disaster challenges.
The collective initiative will be called “Introducing New and Scaling Up Existing Climate Risk Parametric Insurance Products in Fiji,” and is set to operate for two years, starting August 1, 2024. The project will also involve collaboration with organizations such as the Fiji Crop and Livestock Council and The Sugar Cane Growers Council.