A new project to develop climate-smart insurance for micro, small and medium-sized enterprises (MSMEs) in the Philippines will be put in place with the support of Asian Development Bank (ADB). It will be administered through the Asia-Pacific Climate Finance Fund (ACliFF).
The climate-smart insurance project will be the first project under the Vulnerable Twenty Group’s (V20) new Sustainable Insurance Facility (SIF).
The project will establish a viable and sustainable business case and model for climate and disaster insurance for the Philippines MSMEs. This will also explore solutions that address the gender-specific impacts of disasters affecting MSMEs.
The programme outcomes will contribute toward the InsuResilience Global Partnership’s Vision 2025 target to cover 500m poor and vulnerable individuals against climate and disaster shocks by 2025.
MSMEs remain underserved and in some instances, unreached by insurance markets, leaving them highly vulnerable to climate and disaster shocks.
ADB sustainable development and climate change department director general Bruno Carrasco said, “Supporting the climate and disaster resilience of MSMEs not only supports the resilience of the overall economy but indeed the business owners, employees and the communities they serve, many of whom are vulnerable and also low-income sections themselves.”
ACliFF is a multi-donor trust fund managed by ADB. It was established with the financial support from the Government of Germany’s Federal Ministry of Economic Cooperation and Development, whose funding will support the climate-smart insurance programme.
Government of Germany’s federal ministry of economic cooperation and development director general Jürgen Zattler said, “Small enterprises frequently lack access to effective risk management tools, such as climate risk insurance, to protect against climate and disaster shocks.
Dr Zattler said, “Promoting insurance access and adoption among small enterprises provides financial protection that helps to safeguard development gains and avoid reliance on adverse and less effective coping mechanisms.”
Addressing the impacts of extreme weather events is one of four priority areas for the financial risk management products supported by ACliFF. The fund will also explore future collaboration with the V20’s SIF in other countries of Asia and the Pacific.