The IDF aims to optimise and extend the use of insurance and its related risk management capabilities to build greater resilience and protection for people, communities, businesses, and public institutions that are vulnerable to disasters and their associated economic shocks.
- The global resilience challenge – Economic and humanitarian risks associated with catastrophic weather and climate-related hazards are increasing, representing a major challenge to global resilience, particularly in middle/low-income countries. This challenge was highlighted by the recent adoption of global agreements (Sendai Framework for Disaster Risk Reduction 2015-20301; Sustainable Development Goals 20302; and the COP21 Paris Agreement3) which form the UN Agenda 20304.
- The protection gap – An estimated $163bn of assets are underinsured in the world today, leaving an exposure gap that poses a significant threat to livelihoods and global prosperity. Emerging economies account for $160bn (96%) of the total global insurance protection gap5. The focus of the IDF partnership is to help close this protection gap – thus building global resilience and protecting economies.
The role of insurance – Growing evidence indicates that countries with greater penetration of insurance coverage have faster economic recoveries from disasters and rebuild with greater resilience to future disasters. Research has shown that a 1% increase in insurance penetration can reduce the disaster recovery burden on taxpayers by 22%6. A key goal of the UN Agenda 2030 is to take a risk-based approach to manage the risks of extreme events and climate. Within the frameworks that form the UN Agenda 2030, including the Addis Ababa Action Agenda on Financing for Development, insurance is explicitly recognised as a key vehicle to enable the risk sharing and transfer solutions required for greater global resilience.
The need for greater coordination and collaboration – Efforts to improve global resilience and address the protection gap have to date been primarily driven by a handful of private/public stakeholders. Given the scale, scope and complexity of the resilience and protection gap challenge, a coordinated and collaborative approach bringing together the insurance industry and relevant stakeholders is critical to meeting the goals of the UN Agenda 2030.