Sovereign risk transfer project is launched by the IDF, UNDP, and the German Government to benefit nearly 17,000 smallholder farmers over two years
London, UK, 5 September, 2023: The Insurance Development Forum (IDF), the United Nations Development Programme (UNDP), the German Government, and the government of Uzbekistan today launched a EUR 1.9 million project to develop and implement a sovereign risk transfer scheme consisting of a multi-peril indemnity insurance product to protect climate-vulnerable farmers in Uzbekistan.
Agriculture plays a crucial role in Uzbekistan’s economy, accounting for approximately 25% of the national GDP. Among the agricultural sector, dehqan farmers – otherwise known as smallholder farmers – occupy 13% of the cultivated land, and contribute significantly (65%) to the gross agricultural output.
This heavy reliance on agriculture through smallholder farms makes the country highly susceptible to climate risks and natural disasters. The insurance solution developed under the Tripartite Agreement is expected to initially benefit 16,910 farmers and their families by introducing an effective and inclusive scheme that grants smallholder farmers access to insurance and as such increases their resilience to climate change.
Mr. Alisher Shukurov, Deputy Minister of Agriculture in the Republic of Uzbekistan, said:
“UNDP is a trusted partner of the Ministry of Agriculture of Uzbekistan in combating climatic risks in agriculture and building the resilience of the farmers and smallholders. Therefore, we believe that the current new joint initiative will transform the agricultural insurance market in the country and will support our efforts for agri-food climate change adaptation and mitigation.”
The project partners will develop an indemnity-based solution that will compensate based on the real crop loss, evaluated by loss adjusters that will be trained during the project. This approach facilitates direct interaction with farmers, fostering the development of local insurance markets and knowledge transfer regarding risks and crops.
During the initial year of the project, the team will conduct a pilot of the insurance products in Fergana, Namangan and Andijan oblast. In the second year of implementation, the project plans to expand the coverage by including additional types of fruits and/or vegetables.
In order to enhance the ability of smallholder farmers to withstand the impacts of climate change, IDF Members Europa Re and Swiss Re are partnering with two local insurance companies, Uzagrosugurta and Semurg, to work together to develop an agriculture insurance product for Uzbek farmers.
The Uzbekistan Ministry of Agriculture will closely collaborate in the project, supported by the UNDP country office. The InsuResilience Solutions Fund (ISF) co-funds the project implementation and thereby helps to accelerate growth and enable the potential extension throughout the country.
UNDP Uzbekistan Deputy Resident Representative, Anas Fayyad Quarman, said:
“In the face of accelerating climate risks and natural disasters worldwide and in Uzbekistan, the upcoming project will help to build the resilience of the farmers and smallholders in the country. To this end, the project facilitates and promotes a risk-informed decision-making process in the agriculture sector for farmers and the Government alike by enhancing their knowledge and capacity in collaboration with international industry members. Further, it will contribute to strengthening national food security and enhance the resilience of rural communities against climate risks and accelerate the achievement of SDGs in the country.”
This risk transfer project is part of the Tripartite Programme of UNDP, the German Government, and the IDF that provides technical assistance and sovereign and sub-sovereign risk financing solutions to countries vulnerable to the impacts of climate change, for their public assets, as well as for sectors, such as agriculture, education, health and transport, among others, to protect their most vulnerable populations.
Nadica Jovanovska Boshkovska, Chief Project Officer, Europa RE, said:
“By facilitating the transfer of local knowledge and establishing direct relations with beneficiaries, we are able to create insurance products that are not only more relevant but have real impact to the lives of small-scale farmers in Uzbekistan.”
Ivo Menzinger, Co-Chair of IDF Sovereign & Humanitarian Solutions Working Group and Head Europe, Middle East & Africa and Managing Director Public Sector Solutions at Swiss Re, said:
“Situated within the framework of the impactful and collaborative Tripartite scheme, this initiative resonates well beyond the fields of Uzbekistan. By supporting climate-exposed farmers, it not only cultivates resilience but uplifts entire communities. The project underscores the important role of public-private partnerships in driving impact and closing the protection gap around the world. I would like to acknowledge the contributions of our IDF members from industry, UNDP and BMZ/ISF, whose continuous commitment and collaboration have been central in bringing this vision to reality.”
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Notes for Editors:
About the Tripartite Programme
Announced in 2019 as the Tripartite Agreement between UNDP, the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Insurance Development Forum (IDF) at the United Nations Secretary General’s Climate Action Summit, the Tripartite Programme aims to deliver technical assistance and risk transfer solutions to 20 countries by 2025. Today it has more than 70 IDF insurance industry member experts and more than 60 UNDP local and regional representatives engaging with governments in developing countries vulnerable to the impacts of climate change and other natural disasters.
About the IDF
The Insurance Development Forum (IDF) is an industry-led Public-Private Partnership bringing together insurance industry leaders, government officials, and international organisations.
First announced at the UN Conference of the Parties (COP21) Paris Climate Summit in 2015, and officially launched by leaders of the United Nations, World Bank, and insurance industry in 2016, the IDF looks to leverage the technologies, expertise, and financial mechanisms native to the insurance industry to enable the world’s most disaster vulnerable governments, economies and populations to enhance risk understanding and build resilience.
For further information, please visit: www.insdevforum.org
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About UNDP’s Insurance & Risk Finance Facility
The Insurance and Risk Finance Facility (IRFF) is part of UNDP’s Sustainable Finance Hub, and it is a flagship initiative dedicated to insurance and risk finance. The IRFF manages UNDP’s global representation in the insurance space. It is a one-stop shop for innovative solutions for UNDP Country Offices, programme countries and partners. This includes issues related to insurance and risk finance, networking, partner development, policy, and guidelines, technical and implementation, capacity and assistance, and financing opportunities.
More information available at irff.undp.org
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UNDP Insurance and Risk Finance Facility (IRFF)
About the ISF
The InsuResilience Solutions Fund (ISF) was set up by the German Development Bank, KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and is managed by the Frankfurt School of Finance & Management. As implementing programme of the InsuResilience Global Partnership the ISF seeks to increase the resilience and capacity of developing and emerging countries to adapt to climate change by supporting comprehensive climate risk analysis, offering studies and advice for the development of new concepts for climate risk insurance solutions and co-funding the development and market introduction of climate risk insurance products.
For more details about ISF´s offer, please refer to www.insuresilience-solutions-fund.org.
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5th September, 2023