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The future of impact insurance

Emerging Insight #:

  155
 

Date of Release:

  March 6, 2019
 

Subtopics:

  Impact
 

Source:

  The Facility
 
 

How the industry can contribute to the Sustainable Development Goals

Which trends will define impact insurance in the next decade? And how can we enable the industry to contribute to the Sustainable Development Goals (SDGs)?

Our recent publication predicted how the industry will continue extending valuable coverage to unserved market segments, as well as collaborating with governments to achieve public policy objectives. These objectives relate to a large number of SDGs, as seen in the figure below.

An example of increased collaboration with governments is public-private partnerships to manage risks posed by climate change. Climate change has proven to be both an opportunity and a challenge for the insurance industry. Increasingly visible climate risks may make businesses and households more likely to include insurance in their risk management toolkit. But changes in weather patterns and the need to diversify risks across geographies require large risk pools that are too big for one insurer to bear. Governments used to deal with these risks through their disaster management programmes, but are increasingly partnering with the private sector to make their costs more predictable.

This brings together unusual partners: the public and the private sector speak different languages and have different motivations. The ILO is facilitating a peer learning platform for government agencies – ranging from ministries of agriculture and finance, to central banks, planning commissions and insurance regulators – to learn from each other’s experiences in agriculture and disaster insurance. In many cases, insurers are forming risk pools to jointly partner with government agencies, as in Kenya and Ghana.

To find out more, see our brief on the future of Impact Insurance.