The Insurance Development Forum (IDF), a World Bank and UN-backed partnership of insurers and international organizations, plans to establish an infrastructure fund of hundreds of millions of dollars to help developing countries adapt to the effects of climate change.
The fund will support the development and implementation of climate-resilient infrastructure projects, such as early warning systems, flood defences, and drought-resistant crops.
It will also provide insurance coverage for these projects, protecting them from financial losses caused by climate-related events.
Speaking ahead of next month’s COP28 climate summit in Dubai, IDF secretary-general Ekhosuehi Iyahen said the fund would seek to help those countries already “feeling the brunt” of climate change.
According to the Financial Times, global efforts to combat climate change have faced setbacks in recent months as some governments temper their transition plans and industry initiatives to collaborate on net zero policies have met political opposition.
Michel Liès, chair of the IDF’s steering committee and the insurance group Zurich, said the climate summit would be an opportunity to spread the message that it would be better to spend money on prevention measures ahead of time, “instead of waiting for the catastrophe to happen, waiting for the terrible news on the TV”.
He said it was considerably more efficient to spend money before a disaster than after and that the fund, backed by insurers, would be designed as an infrastructure debt fund and start at a few hundred million dollars.
Liès said there was a need to bring “neutrality and objectivity” to the climate discussion, and that the insurance industry could provide that through its expertise in the modelling and pricing of risk.
The IDF, which was launched at the Paris Climate Summit in 2015, draws on a broad membership, from insurers, reinsurers, and insurance brokers to regulators and international institutions such as the World Bank.
The chances of the world limiting the rise in global temperatures to 1.5c s1.5 pre-industrial times to prevent irreversible consequences to the planet have dwindled, experts say, as greenhouse gas emissions continue to rise.
The question of how to fund adaptation to extreme weather events, including widespread changes to the way land and buildings can be used, has been drawing increasing attention.
Discussions over a so-called “loss and damage” fund to help poorer countries suffering from the consequences of climate change came close to collapse this month.
Some developing countries are frustrated at reluctance by higher income countries to contribute to the fund, first agreed at last year’s UN COP27 climate summit.
International financing institutions and donor countries have focused in recent months on targeted projects to increase the resilience of countries on the front line of climate disasters.
The World Bank said in June it would embed repayment pauses and catastrophe insurance into new loans to its “most vulnerable borrowers”, to help countries quickly tap emergency relief funds they would previously have spent on repayments.
The same month, a multi-donor insurance fund known as the Global Shield Solutions Platform said it would start offering pre-arranged finance to vulnerable countries that could be disbursed before or just after disasters take place.
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