On 7th and 8th June 2021, the Insurance Development Forum (IDF) hosted its virtual Summit. The aim: to unite organisations in their approach to combating climate change.
But the topic of climate change encompasses more than just the weather; it is about multiple factors including the ability and financial security to respond to a crisis. In this sense, the pandemic has highlighted how response plans vary drastically around the globe, and this is a cause for concern.
The IDF Summit explored this important topic during its session ‘In Conversation with Countries: Covid Response, Adapting to Climate Change and Building Resilience: Managing Constrained Public Finances’, which was moderated by Stefan Dercon, Professor of Economy Policy at the Blavatnik School of Government and the Economics Department at Oxford University.
The panel of Ministerial speakers included Alex Alonso Contreras Miranda, General Director of Macroeconomic Policy and Fiscal Decentralization, Ministry of Economy and Finance in Peru; Dr Jürgen Zattler, Director General, German Federal Ministry for Economic Cooperation and Development; Kamal Kishore, Member of the National Disaster Management Authority India; and Neil Cole, Executive Secretary of the Collaborative Africa Budget Reform Initiative (CABRI).
Prevention is better than cure
No matter how low risk they may seem, the overwhelming response from the panel was that we need to be prepared for any number of extreme occurrences; from having information and plans in place, to having access to the finance needed to deliver them.
“Finance is the glue that allows an action plan to take place,” Dercon explained. “For rich countries, finance isn’t a problem, you can put yourself in debt; but if you are a low income country, these resources aren’t available and to raise funding is costly and inefficient.”
As the panel agreed, Covid has highlighted how most countries do not have plans in place for extreme situations, and many have been faced with increased debts and declining revenues – all contributing factors that cause debt distress. However, unlike Covid, we know the potential impacts of climate change, and therefore we can plan for resilience.
“The challenge of climate change is also the challenge of sustainable development and its solution requires a global agreement,” Miranda explained. “The pandemic has created a perfect opportunity to promote an inclusive, green, low-carbon and resilient recovery from the risk of natural disasters and climate change events.”
“Countries need to be able to weather the storm; whether it is a health, economic or climate crisis,” Cole agreed. “As we frame fiscal policy, we need to be thinking about public finances, contingency reserves, pooling responses, and investing in solutions so countries can respond to a crisis.”
“It is about reallocating budgets towards resilience; from climate insurance to protect the poor and vulnerable, to scaling up the InsuResilience Solutions Fund,” Zattler added. “It is about being bolder; to take the crisis response and focus it on all kinds of global risks; to set up a real instrument that is dedicated to tackling global risk on a broader scale for all.”
As Kamal pointed out, the pandemic has provided the world with key lessons: “From the need to ringfence resources for response as well as resilience; to focusing on the most vulnerable, reducing financial stress at the ministerial level, and ensuring that infrastructure spending is climate and risk sensitive. We need to plan, design and integrate green infrastructure, and build forward better,” Kamal said.
As Stefan concluded, we are all recognising the global ways of responding, but, as the panel agreed, attention to detail is key; from bringing together fast solutions and finance, to ensuring that insurance doesn’t de-incentivise investments in resilience.
To access the IDF Summit 2021 sessions in the On Demand Library, please register here, or if you attended the event, please use the same unique link you received when you registered to access the site.
28th September, 2021