The Nigerian insurance market like many other African countries could benefit more from the InsuResilience solutions funding for climate change insurance products.
The InsuResilience Solutions Fund (ISF) has again announced the opening of its third Call for Proposals, which is open till February 7th 2020.
It will be recalled Royal Exchange General Insurance Company Limited (“REGIC”), Nigeria’s foremost insurer had benefited from the earler InsuResilience Investment Fund (“IIF”). InsuResilience Investment Fund (“IIF”) had acquired 39.25 percent equity stake in Royal Exchange General Insurance Company .The specific objective of the IIF fund is to reduce the vulnerability of micro, small and medium enterprises (MSME), as well as low-income households, to extreme weather events. Currently, there are two investments in Africa, five in Latin America, one in Central Asia, and one global investment.
On the new funding opportunity: on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank launched the ISF in October 2017 to increase the resilience against extreme weather events at the micro, meso and macro level.
The ISF, now managed by Frankfurt School of Finance and Management gGmbH since January 2019, supports the development of financially sustainable insurance solutions tailored to meet the needs of households, small and medium-sized enterprises, humanitarian organisations and governments in Latin American, African and Asian countries affected by climate change which are eligible to receive official development assistance (ODA). Thereby, the ISF increases the resilience of poor and vulnerable people to extreme weather events such as floods, wind/storm, excess rain, drought or cold spells.
Therefore, the ISF provides partial grant funding and advice to partnerships between (local) public entities (e.g. national or regional government bodies), private companies in the insurance sector and NGOs to transform climate risk insurance concepts into products ready for market placement and
bring successfully piloted climate risk insurance products to scale.
Grants of up to 2.5 million ruros can be provided for development, introduction and scale-up costs (e.g. staff costs, data collection, modelling, legal fees, sales and distribution channel development etc.) for direct and indirect climate insurance products.
The applying partnerships have to consist of at least a user, (e.g. national or regional government bodies, NGOs, local insurer) and an implementing partner and potential risk taker, (e.g. Reinsurance Company).
Further parties, e.g. other product implementing partners such as risk modelling agencies, insurers, brokers, can additionally be involved. By initiating the ISF, KfW is making an important contribution to one of the objectives of the InsuResilience Global Partnership: the identification and development of new climate risk finance and insurance solutions to close the protection gap in the field of climate risk.
Modestus Anaesoronye
