Workstream 2:
Action & Implementation

Enable effective action and implementation of high-quality Climate and Disaster Risk Finance and Insurance solutions in poor and vulnerable countries

German Development Bank (KfW) &
The InsuResilience Solutions Fund (ISF)

Program Alliance Implementing Partner Update –
The InsuResilience Solutions Fund: Closing the Protection Gap

By KfW Development Bank & InsuResilience Solutions Fund

The InsuResilience Solutions Fund (ISF) supports the development of innovative climate-risk insurance products deployed in developing and emerging countries to mitigate the effects of climate change. The ISF is funded by the KfW Development Bank on behalf of the German Government. The Frankfurt School of Finance & Management is responsible for implementing the programme. The aim of the ISF is to strengthen the resilience of poor and vulnerable people when they are confronted with extreme weather events such as floods, storms, drought or cold spells.

2020 was the second operating year of the ISF and activities are in full swing. The objective is to close the protection gap and the ISF seeks to achieve this by focusing on solutions for those people who are disproportionately exposed to climate risks and have no access to climate risk insurance. The ISF is therefore following a value-chain approach covering all stages of insurance product development, from risk analysis through concept development to product roll-out.

The ISF is currently supporting local partners in three countries at the municipal, regional and national level. The work includes analysis of climate risks and assessment of cost-effective adaptation measures including risk transfer through insurance. The results of the studies provide political decision-makers with the necessary information to weigh up and prioritize different adaptation measures based on cost-benefit analyses. The results contribute directly to the InsuResilience Global Partnership’s Vision 2025 of improving access to and understanding of data and modelling for vulnerable countries and communities.

The ISF finances feasibility studies and provides advisory services so as to create the platform for developing new and concrete insurance approaches against climate and natural disasters. Seven studies or consulting mandates for concept development have already been conducted and three more are ongoing. Since its establishment in 2019, the ISF has already launched four Calls for Proposals that generated worldwide interest from the private and public sectors, alongside civil society. By the close of 2020, the Fund had received almost 120 applications for co-financing product development of innovative climate-risk insurance solutions. ISF strives to ensure that the needs and requirements of the poor and vulnerable are met. ISF support therefore always requires a joint partnership between demand side – those interested and in need for insurance cover against climate risks – and supply side – companies and providers of insurance products, services and the necessary risk capital.

Eight Grant Agreements for product development support have already been signed. The benefits are projected to reach more than eight million beneficiaries by 2025. The agreements support macro solutions in Peru and North Macedonia and meso/micro approaches in South Africa, Serbia, Colombia, Bangladesh, Ghana and Tanzania. Technological solutions, such as the use of artificial intelligence in the risk assessment of schools in Peru, lead to increased cost-effectiveness.

The programme contributes to further development of private insurance markets. 16 representatives from local insurance providers or companies active in the sector are involved in the ISF project partnerships that have been funded up to now. The ISF actively contributes to fulfilment of the goals of Vision 2025 through these activities.

The concept of the ISF has a strong focus on partnerships and it addresses the current needs and support required to better protect those impacted by climate and natural disasters. This is why the ISF also represents an important implementation vehicle for the Tripartite Agreement. A Project Coordination Unit (PCU) was established at the Frankfurt School of Finance & Management in 2020 to facilitate the process of developing concepts driving risk transfer solutions for sovereigns, sub-sovereigns and other public-sector entities. A further aim was to support project partnerships in submitting proposals for co-financing to the ISF.

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