January has raced away without waiting,  but not without reflection on UNDP’s work in insurance and risk financing and our work at the Insurance and Risk Finance Facility.

Firstly, a note on the context. For those of us of a certain age, or perhaps all of us, it feels very much as we are living in an incredibly uncertain period. Climate change continues to drive forward floods, droughts, cyclones, sea level rise, and water table collapse. Humanity continues to degrade the environment and biodiversity at alarming rates. We’ve seen ocean temperatures reach their highest level ever in 2023.  Covid has remain stubbornly with many of us, its impact as yet not fully known. And the conflicts have not only caused massive loss of life and direct damage, but also fuelled further insecurity, pressure on food and energy prices, and much more.

The 2024 UN Humanitarian Appeal has been set at US$46 billion a drop of US$5 billion from 2023 but still a fourfold increase in the past 10 years. This is a catastrophically bad trend.

The WEF’s 2024 Global Risk Report charts a dangerous period of competing and co-existing risk, a return to older threats like trade wars, inflation, cost-of-living crises, social unrest and geopolitical confrontation. This is all right before us, combined with newer elements like unsustainable debt, low-growth and a decline in human development progress. The long-term impacts of climate change on the environment, the economy and on lives and livelihoods loom large.

This is the context for 2024, continuing much of what we saw in 2023. Despite this, and perhaps partly because of the rising frequency and severity of shocks and hazards, 2023 was a remarkably busy year.

The Tripartite Agreement, funded by the German Government, and working with 20 of the world’s largest insurers under the banner of the Insurance Development Forum, continues to grow its number of mature projects. Alongside UNDP’s long-term development efforts, working with governments to put risk transfer at the heart of development, we now have 9  countries under full implementation, and estimate the final programme will financially protect at least 64 million people in 20 countries from rising climate-related hazard and shock. See our snapshot of the programmes’ progress here!

Our bespoke partnerships with Milliman and Generali have brought significant technical resources to bear at the country level, building on the foundation of UNDP’s country offices and relationships with government. While the UNDP Milliman GAIN programme has made headway on building the actuarial capacity of more than 20 countries – through the mentorship program, toolkit development, education working groups and regulatory roundtables, the partnership with Generali has focused on a set of jointly delivered activities supporting multi-country financial protection for small business.

Our programme of work boosting the long-term financial resilience of smallholder farmers, which is largely financed by the Bill and Melinda Gates Foundation, has matured over the course of 2023. Full workplans have been developed for India, Bangladesh, Uganda, Ethiopia and Tanzania. Alongside this country-focused work, a global platform is being constructed to draw in increasing volumes of financial and technical resources to build smallholder farmers’ resilience to climate change. And there is much to do.  Smallholder farmers are the foundation of livelihoods, production and food security in sub-Saharan Africa, yet only 3%have insurance over their agriculture, leaving them financially vulnerable in a world of rising risk. But more than that; this initiative is exploring how insurance can not only protect farmers, but also incentivise their take up of adaptative techniques and technologies as well.

Several new pieces of work are charting the way forward for UNDP’s work in the risk transfer space. 

• Insurance played a critical part in transferring the one million barrels of oil off the crumbling FSO Safer tanker sitting in the Red Sea opposite Yemen’s coastline. Here a relatively modest insurance piece sitting at the centre of the project (and brokered by our partner Howden) has been critical to the saving of US$20 billion of ecological damage across the region. 
• Our engagement initiative, that works with governments to build financial risk frameworks began in Senegal, Comoros and Uganda, looking to help support financial stability into the long-term.
• The first ever UNDP reef-insurance initiative has commenced full implementation with partners SwissRe in Indonesia. Financed by the Ocean Risk and Resilience Action Alliance, the initiative will protect the reefs that protect fishing communities and coastal villages, a springboard to rollout across the country. 
• The first versions of our Global Insurance Innovation Challenge, driving finance into insurtech and financial resilience through national insurers, has kicked off in Malaysia in partnership with Generali, and in four countries in partnership with the world body for Cooperative and Mutual insurers, ICMIF.

We have also seen the production and release of some great knowledge products, such as: the Inclusive Insurance Navigator that helps national insurers navigate questions of growth, relevance and product development ; our report on how Takaful can and must provide financial resilience to underserved Muslim populations around the world  and a whole set of diagnostics across countries as diverse as Uzbekistan, Tanzania and Colombia.

But what lessons have we taken from all this?

Firstly, that partnership is central. The development system can only support government efforts to financially protect life, livelihoods, assets and more, through a collaboration with the private sector.

Secondly, UNDP’s country offices provide a remarkably and unique foundation for the deployment of private sector technical and financial resources.

Thirdly, that need is growing far beyond existing resources, noting the 36 countries that asked for support from UNDP’s IRFF in the last year alone. A  need that is growing each day, as we see ever rising levels of risk across all aspects of life and living, driving ever more complex, frequent, and severe hazards and shock.

And finally, we know that all of us need to make sure we build the financial protection of communities not only in large middle-income countries but also fragile states, small-island states and LDCs.

It has finally become clear across different areas of development that insurance, risk financing and risk transfer are critical to incentivising growth and securing progress, but they remain largely unutilised.  

In 2024, look out for exciting new partnerships and programmes to be launched by UNDP’s IRFF. We will be reassessing our tailored offers for countries, learning from our growing implementation footprint and making sure our ongoing efforts better reflect the reality of those we serve.

New initiatives are being developed help drive more resources into countries and communities, working with government to build long-term financial resilience while protecting households, small businesses, farmers and nature right here and now.

Join us in delivering solutions for financial resilience, that not only cut through the ever-expanding burden of humanitarian assistance, but incentivise both growth and development.

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