The members of the Insurance Development Forum (IDF) and the Principles for Sustainable Insurance (PSI) aim to support the G7 Climate Risk Insurance Initiative. This Initiative aims to expand access to climate risk solutions and markets for 400 million people, including microinsurance for at least 100 million people in vulnerable emerging markets by 2020.
At the same time, there are 1.7 billion adults (particularly women) and 65 million micro, small and medium enterprises (SMEs) who lack access to financial services, with a financing gap of USD170bn for individuals2 and USD5.6trn among micro/SMEs. While microfinance investment continues to grow rapidly, the creation and delivery of financial services for women is still challenging. MFIs could also do more to help their clients adapt to climate impacts, supporting womens’ roles as ‘Environmental Stewards’.
Insurers and other investors should recognise the strategic benefits of microfinance investment: the low volatility and correlation with traditional investments, as a way to expand micro and climate insurance and to enable economic growth and the Sustainable Development Goals (SDGs).
As part of the September 2019 UN Climate Summit’s Action Agenda, and to support PSI/IDF goals, investors could commit to increase investment in microfinance funds. Partnering with fund managers could aim to improve microinsurance cross-selling and accelerate action on the SDGs.
Public sector institutions and the wider development community could cooperatively aim to accelerate the mutually beneficial growth of micro/climate insurance and microfinance, while improving physical climate resilience and gender diversity.
At the UN Climate Summit, governments/DFIs could also announce new partnerships with microfinance funds to deepen support for women entrepreneurs, to improve resilience to physical climate impacts and to help MFIs distribute more micro/climate insurance products.
Climate resilience and gender diversity enhanced microfinance funds should be seen as a way for investors and the public sector to help many of the most exposed developing countries improve their resilience and lay the groundwork for the Global Commission on Adaptation’s Action Agenda.
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