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May

"Insuring the Survival of the Poor – Making Development Possible"


Opening speech by Federal Minister Gerd Müller at the G7 Stakeholder Conference, Gasometer Schöneberg, Berlin, 7 May 2015

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Ladies and gentlemen,

The images of the earthquake in Nepal dominate our news. We see the crumbled homes, the suffering. We see that natural disasters can undo development achievements overnight, plunging people into renewed poverty. What we often do not see, and therefore tend to forget, is that climate change is causing more and more natural disasters – big ones and small ones: floods, droughts. But we do not hear about most of these disasters here. We consider them to be too regional, too far away, so they are not on our radar screen. We do hear about drought in California on our prime time news. But who has heard about the droughts in Senegal and Mauritania? 

And scientists are telling us that extreme events are increasingly becoming the normal course of events. Out of the ten countries that are affected most, nine are developing countries!

Over the past four years, natural disasters affected 310 million people there, and the trend is going up. Economic damage alone was almost 2.2 trillion US dollars between 1994 and 2013, according to the Global Climate Risk Index 2015, quite apart from the human suffering involved. These figures show that we need to negotiate climate targets and limit climate change. But we also need practical answers for those who are already suffering under climate change.

The poorest contribute least to climate change, but they suffer most and have the least capacity to take precautions.

The President of Kiribati, Anote Tong, is with us today. Mr. President, your country is literally at risk of being washed off the map if sea levels continue to rise. You will tell us about that later this morning. For people in our region of the world, it is hard to imagine the level of risk that people have to deal with on a daily basis in the world's poorest countries in particular.

We in the G7 have to shoulder responsibility. We will not leave you to fend for yourselves. We will help ensure that natural disasters do not keep turning into humanitarian disasters. And we are giving a new and innovative answer to the question that will certainly come up at the climate negotiations in Paris: how can the international community address climate change-related damage and loss in a spirit of solidarity?

Climate risk insurance provides an opportunity for stakeholders to obtain insurance against the risks of extreme weather events. What is an incalculable drama for individuals or for individual governments can become a calculable risk for the community of the insured.

Such insurance systems will receive capital from donors such as Germany. Our goal is to become able to handle the risks, rather than limiting ourselves to disaster management.

We have achieved some initial successes. Together with the UK, we launched the African Risk Capacity last year with an amount of 100 million US dollars. This African drought insurance scheme was immediately able to demonstrate how it works, because the risk materialized, and the first money was disbursed a little more than two months ago: 26 million US dollars in Niger, Senegal and Mauritania. 1.3 million people received assistance. The benefits were evident immediately: the money is channeled in a more targeted way than normal emergency relief, because there are relief programs that have been approved beforehand. The money is disbursed more quickly than normal emergency relief. People do not have to wait long for compensation. This saves lives, and it reduces indirect consequences. No farmer has to slaughter his cattle because he needs the feed for his own meals. Nobody has to take their children out of school because they have no income anymore.

And even governments benefit, because they do not have to rededicate part of their budgets to emergency relief. They are not forced to hope for donations and assistance. They acquire clear rights.

And the more a government invests in preventive action, the lower its risk of sustaining drought damage, and the lower its insurance premium. This is an important incentive for using drought-resistant seeds and making water supply more climate-resilient, for instance.

I am very pleased that the Chair of the Governing Board of the African Risk Capacity is with us today. Ms. Okonjo-Iweala, you will tell us more about that scheme later on.

Climate risk insurance is not just about protecting governments but also individuals and enter­prises. Climate risk insurance is a part of survival insurance. It frees people from a vicious circle – after all, who will invest in progress if everything can be swept away any minute? Thus, this type of insurance mobilizes long-term development options instead of short-term survival strategies.

And it improves governments' options for taking precautions based on ownership, rather than waiting for assistance when a disaster occurs.

Together, we can make a big difference. This, too, is one major reason why we are holding this conference. We want your support. We need your support! And we have already received support from you. I would like to thank the Munich Climate Insurance Initiative in particular. It unites insurance companies, civil society and academia in a very innovative cooperative endeavor.

Our goal is to use public funding to mobilize private investment and to leverage impact on a major scale. The consequences of climate change cannot be addressed through official development funding alone.

Through a joint effort, we, the seven large industrialized nations of the world, could give another 400 million stakeholders access to this type of climate risk insurance over the next five years. This would be five times as many people as today, half a billion in total. In that way, we would demonstrate that we are living up to our responsibility of assisting people in places where climate change is slowing down development.

Our vision is a global partnership – with the G7, with developing countries and with other donor countries, with international organizations, with the governments concerned, and with people.

That is why we want to make available 150 million euros for the period up to 2016 to help develop climate risk insurance systems. We are hoping to also mobilize money from our G7 partners, from other donors, and from the private sector.

Germany is providing almost two billion euros a year for global climate action. And we want to further increase our support in the period up to 2020. One major element in this endeavor is the Green Climate Fund. Late last year, my Ministry lobbied for financial contributions to the Fund and contributed to its initial capitalization. Climate risk insurance is another important milestone.

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