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InsuResilience Investment Fund

Coverage against natural disasters

Farmers harvesting potatoes in the Andes

Climate change can be felt in many places, for instance in Peru. In the first half of 2017, the country experienced the worst rainfall and landslides since 1998. Public facilities, including hospitals, were flooded. 115 homes were destroyed. Some small villages were completely cut off. The floods affected more than half a million people and killed at least 70. The long-term consequences of the disaster particularly affect small farmers and small business owners. Some of them have lost their entire livelihoods.

Most people in developing countries have no kind of insurance against the effects of floods, heavy winds and droughts. This means that such weather events constitute a poverty risk for them. Every storm, every shower makes small farmers fear for their crops. They have to adapt to the consequences of climate change. But who will pay for broken dykes, destroyed buildings and lost crops?

The InsuResilience Investment Fund (IIF), which was set up by KfW Development Bank on behalf of the BMZ, supports the introduction and enhancement of insurance products that can cover people against climate damage, including in Peru. The IIF has provided some 75 million euros to support insurance solutions all over the world. It invests in local insurance companies and financial institutions, such as the local microfinance institution Caja Sullana in Peru, and provides technical expertise to assist them. The IIF has enabled Caja Sullana to offer insurance against the consequences of floods and droughts for small farmers and small to medium-sized enterprises. Following two floods (including the flood in March 2017) and a drought, a total of 466 farmers and small business owners received 630,000 US dollars in insurance benefits. This has enabled farmers to rebuild and replant their fields, and it has enabled business owners to repair damaged buildings, thus facilitating quicker recovery from the damage.

By 2020, the IIF is to provide coverage against the consequences of natural disasters to 16 million people worldwide. In the long run, the target is for the IIF to reach about 100 million poor and vulnerable people in developing countries. In order to facilitate that and enable the IIF to develop even more insurance products, the Fund was opened for private investors in July 2017.

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