Finance and insurance solutions InsuResilience Investment Fund (IIF)
The InsuResilience Investment Fund (IIF (External link)) 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 and thereby enhance their adaptation to climate change.
Loans and equity
IIF operates in countries in which climate risk insurance is not yet available or still under development. It provides loans to, and makes equity investments in, financial institutions and insurers in these countries, enabling them to offer insurance to their clients against the impacts of climate change.
Not only clients profit because they then have cover in the event of a climate-related disaster and can continue their business activities – the financial institutions profit as well because they no longer lose clients when an extreme event occurs. This contributes to the country’s debt sustainability and economic stability.
Moreover, IIF also invests in providers of the technologies needed for modern agriculture, such as data platforms for climate data and information or weather stations for the reliable measurement of climate data.
The Fund’s investments are helping in India, for instance, to expand the weather data measurement infrastructure (especially automated weather stations) and other services for weather insurance in many rural districts.
IIF’s partners benefit not only from the Fund’s financial resources, but also from the comprehensive technical advice that is key to developing and improving needs-driven climate risk insurance products.
Furthermore, the Fund can offer premium support facilities in the difficult start-up phase until insurers are able to provide insurance fully out of their own resources.
Such targeted support is complemented by overarching initial and continuing training services for key governmental bodies, cooperative ventures with the research community, and awareness-raising campaigns for affected people about the negative impacts of climate change and the insurance options.
Public-private partnership project
By mid-2023, IIF had granted loans to its partners totalling more than 190 million US dollars and had made equity investments amounting to more than 76 million US dollars. The Fund now invests in 32 partners on four continents. As of 30 June 2023, these activities had provided more than 57 million beneficiaries with cover against weather risks.
The Fund is a public-private partnership project: in addition to public funding from KfW and other donors such as the European Investment Bank or the Open Society Foundation, it also mobilises capital from private investors. More than one third of the capital currently paid into the Fund or pledged to it already comes from private investors who would not have dared enter the still nascent insurance markets in developing countries without the KfW commitment. The Fund thus makes an important contribution to boosting the commitment of the private sector in developing-country insurance sectors.
Germany also uses the Fund to support the world's largest private climate risk insurance programme, the African and Asian Resilience in Disaster Insurance Scheme (ARDIS) (External link) run by VisionFund International (External link).
As at: 03/11/2023