Flooding on the Philippines

Loss and damage protection BMZ achievements in climate and disaster risk finance and insurance

Precautionary financing mechanisms improve people's protection against climate-related loss and damage, thus strengthening their financial resilience against the adverse effects of climate change. Disbursements can provide rapid assistance in an emergency and prevent impoverishment, hunger and indebtedness.

During its G7 Presidency, Germany, together with the V20 (Vulnerable Twenty, an alliance of countries particularly vulnerable to climate change), made a start on developing a Global Shield against Climate Risks. The Shield gathers activities in the field of climate risk finance and preparedness under one roof. As a result, people and authorities will be able to access more easily and more quickly the assistance that they urgently need when disaster strikes.

The Shield builds upon the InsuResilience Global Partnership (External link), which works towards comprehensive and active climate risk management worldwide. The Partnership facilitates cooperation among governments, the private sector, multilateral institutions, civil society organisations and research institutes.

German activities InsuResilience Global Partnership

Expanding climate and disaster risk finance and insurance solutions

The aim of the InsuResilience Global Partnership (External link) is to increase the long-term resilience to climate risks of the poorest and most vulnerable groups in developing countries and emerging economies. The expansion of climate risk financing and insurance instruments is intended to enable governments, enterprises and households to respond more quickly and effectively to natural disasters, thus minimising potential resulting costs.

During Germany's G20 Presidency in 2017, it joined forces with the UK, Fiji, Ethiopia and the World Bank to launch the InsuResilience Global Partnership as a joint G20 and V20 (External link) initiative. The V20 (Vulnerable Twenty Group) is an alliance of the finance ministers of the 68 countries most vulnerable to climate change. The Partnership now has more than 140 members representing industrialised and developing countries, civil society, the private sector, international organisations and the scientific community (as of October 2023). Germany is the biggest sponsor of this key initiative.

The various programmes within the Partnership support pre-agreed schemes, such as climate risk insurance, which provide protection against the financial risks of climate impacts and disasters. Quick assistance and recovery protect the livelihoods of poor and vulnerable people against the consequences of climate-related events. Moreover, the Partnership supports the development of comprehensive climate and disaster risk strategies at the national and local levels in poor and vulnerable countries.

The Partnership has set itself an ambitious target in its Vision 2025 (External link): to provide coverage to 500 million of the world's poorest and most vulnerable people by 2025. Currently, some 30 programmes comprising 475 projects are in progress under the umbrella of the InsuResilience Global Partnership in more than 120 countries. As a result, 190 million people had already gained coverage against climate risks in 2022.

Global Shield against Climate Risks

See also
Logo: Global Shield against Climate Risks

The Global Shield against Climate Risks (External link) builds on this experience, the existing structures and the close partnership with the V20. The Global Shield integrates the existing activities and makes them more readily accessible, while mobilising additional finance at the same time. Cover against climate risks is thus made more systematic, better coordinated and more permanent compared to previous instruments. The aspiration is to provide better coverage against climate risks for an even greater number of vulnerable people and countries, closing their coverage gap permanently in a step-by-step process.

Finance and insurance solutions

  • Finance and insurance solutions

    Caribbean Catastrophe Risk Insurance Facility (CCRIF) Internal link

    The Caribbean Catastrophe Risk Insurance Facility (CCRIF) offers coverage against hurricanes, earthquakes and heavy rains. Its assistance goes beyond the payment of insurance benefits. Countries also receive technical assistance for reconstruction.

     Caribbean Catastrophe Risk Insurance Facility
  • Finance and insurance solutions

    The Global Risk Financing Facility (GRiF) Internal link

    The Global Risk Financing Facility (GRiF) was set up in order to enhance the financial resilience of poor and vulnerable people in developing countries against natural disasters. It supports governments as they introduce risk financing tools, including market-based insurance.

    Logo: Global Risk Financing Facility
  • Finance and insurance solutions

    Global Index Insurance Facility (GIIF) Internal link

    The Global Index Insurance Facility (GIIF) supports the expansion of index-based agricultural insurance to protect poor and vulnerable people against extreme weather events.

    Logo: Global Index Insurance Facility
  • Finance and insurance solutions

    InsuResilience Solutions Fund (ISF) Internal link

    The InsuResilience Solutions Fund (ISF) is a key implementation programme of the InsuResilience Global Partnership. It supports the development of innovative climate risk insurance products in developing and emerging economies in order to buffer the impacts of climate change.

    Logo: InsuResilience Solutions Fund
  • Finance and insurance solutions

    InsuResilience Investment Fund (IIF) Internal link

    The InsuResilience Investment Fund (IIF) administers two funds with the overall objective of improving access to and the use of insurance in developing countries. The specific objective is to reduce the vulnerability of micro, small, and medium enterprises (MSMEs) as well as smallholders and low-income households to extreme weather events.

    Logo: InsuResilience Investment Fund
  • Finance and insurance solutions

    Natural Disaster Fund (NDF) Internal link

    The Natural Disaster Fund (NDF) offers developing countries appropriate solutions that are based on scientific weather models, insurance mathematics methods and risk transfer instruments.

    House in Haiti destroyed by an earth quake

Cooperation in action

  • Pakistan: Local micro insurance

    InsuResilience Investment Fund provides support for local institutions Internal link

    Pakistan regularly experiences extreme weather events with negative consequences for the population, especially in agriculture. With support from the InsuResilience Investment Fund (IIF), a local foundation in Pakistan offers farmers a chance to combine micro loans for livestock purchases with micro insurance.

    Market in Islamabad, Pakistan
  • India: InsuResilience Solutions Fund

    Insurance against natural disasters for the Indian state of Nagaland Internal link

    Weather extremes such as torrential rainfall, floods and landslides cause major damage to public and private property. In 2017 alone, such events affected 30 per cent of Nagaland’s population. The InsuResilience Solutions Fund is promoting the development of an insurance scheme that boosts the state’s financial capacity in the event of disaster.

    Torrential rainfall in India

As at: 03/11/2023