“A synergetic partnership:” UNCDF, PHAMA Plus join forces to promote parametric insurance in the Pacific
The UN Capital Development Fund (UNCDF) and the Pacific Horticultural and Agricultural Market Access Plus (PHAMA Plus) Program are forging closer ties to raise awareness on climate and disaster risk financing in Fiji, Tonga and Vanuatu.
The two organisations are collaborating to help Micro, Small, and Medium Enterprises (MSMEs) enhance their understanding of and increase access to and usage of Climate Disaster Risk Financing and Insurance (CDRFI).
A key focus of the collaboration will be to interview both MSME owners and employees to gain a more comprehensive understanding about the climate risks that affect them the most.
The findings will inform the UNCDF-led Pacific Insurance and Climate Adaptation Program (PICAP) activities in the region, with MSMEs a key target segment given the critical role they play in regional economies.
Krishnan Narasimhan, Programme Manager UNCDF, said: “PICAP has pioneered the introduction of the region’s first ever parametric microinsurance product, launched on 25th August 2021, presently covering over 1300 households in Fiji in a pilot. The product offers protection against cyclones and will provide a total insurance cover of F$1000, target beneficiaries include small holder farmers, fishers, market vendors and small business owners.
“We are excited to partner with PHAMA Plus to collaborate together in developing suitable climate disaster risk insurance products for MSMEs in Fiji that are vulnerable to natural hazards and presently do not have risk transfer solutions.”
Mr Narasimhan added: “Both PHAMA Plus and UNCDF’s PICAP are supported by the Australian Government Department of Foreign Affairs and Trade and the New Zealand Ministry of Foreign Affairs and Trade, hence this is a very synergetic engagement that has potential to develop into a very robust enduring partnership.”
Climate and disaster risk finance covers a range of financial instruments designed to cushion against the impact of natural disasters.
In a region prone to cyclones, droughts, flooding and volcanic activity, these instruments can be crucial for individuals, communities, the private sector and governments to cope with the financial impacts of natural disasters. An example is the Pacific’s first climate and disaster risk parametric micro-insurance product developed and piloted by PICAP.
PHAMA Plus National Facilitator Fiji Navitalai Tuivuniwai said: “This is a welcomed collaboration that will bring about new weather index-based microinsurance products and cover loss of income for smallholder farming households and businesses post to cyclones and adverse weather conditions.”
PICAP is funded by the governments of New Zealand and Australia, and Luxembourg’s Climate and Energy Fund. The Fiji component that includes “Developing Climate Disaster Risk Financing Framework and Parametric Insurance” is funded by the India-UN Development Partnership Fund administered by the UN Office for South-South Cooperation.
Parametric insurance (which is also known as weather index or index-based insurance) aims to mitigate the hardship of insured farmers/ fisherfolk / small businesses after loss of income or earning opportunity due to damage caused by adverse weather conditions.
The key benefit of parametric insurance is the quick payouts without the need for loss assessment/verification. Payment is purely based on trigger events (a certain wind speed or rainfall level being reached) that is expected to result in a loss to the insured.
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