April 18, 2016 by Canadian Underwriter
Leaders of the United Nations, the World Bank Group and the global insurance industry on Monday announced the formation of the Insurance Development Forum (IDF), which occurred at a high level meeting in Washington, DC, last week.
The IDF has two aims: to incorporate insurance industry risk measurement know-how into existing governmental disaster risk reduction and resilience frameworks and to build out a more sustainable and resilient global insurance market in a world facing growing natural disaster and climate risk.
The announcement followed a keynote address by UN Secretary General Ban Ki-moon at a planning conference last week, which emphasized the critical role that the insurance industry can play in building natural disaster resilience and helping meet the UN’s Sustainable Development Goals.
Today in the developing world, more than 90% of economic costs of natural disasters are uninsured, known as the protection gap, IDF said in a statement on Monday. The IDF mission is to better understand and utilize risk measurement tools to help governments apply that knowledge at “multiple levels” in order to better deploy governmental resources targeting resilience to protect people and their property.
During its inaugural meeting, the IDF established four priority work streams:
The IDF said in the statement that it acts as a forum to enable: the optimal coordination of insurance related activities; the development of shared priorities; the mobilization of collective resources; the development of strategic and operational relationships within and between governments, industry and international institutions; and the avoidance of unhelpful and unnecessary fragmentation of efforts and resources. “These collective actions can help close the protection gap,” the statement said, adding that the forum will be led by a high level steering group of senior leaders from the insurance industry and governmental institutions supported by an executive secretariat, housed at the International Insurance Society (IIS).
The IDF is chaired by: Stephen Catlin, executive deputy chairman of XL Catlin, IIS deputy chair and chair of the Association of Bermuda Insurers and Reinsurers. Co-chairs are Joaquim Levy – managing director and World Bank Group chief financial officer and former Minister of Finance of Brazil – and Helen Clark, administrator of the United Nations Development Program and former Prime Minister of New Zealand.
“Risk identification, measurement, pooling and diversification are essential features of any successful insurance program and regulation must recognize their value and purpose,” Catlin said in the statement. “These skills can increase the utilization of insurance, which will reduce the reliance on post-disaster aid and better target resources to the most important and needed humanitarian crises.” Catlin added that “research has shown that a 1% increase in insurance penetration can reduce the disaster recovery burden on taxpayers by 22%.”
Levy noted that “the insurance market is close to non-existent in many countries,” and the formation of the IDF is a “pivotal moment, with all the actors in the insurance industry coming together and strengthening partnerships. With only about 17% of people in low and middle income countries with financial savings and insurance, compared to 45% in high income countries, it is the most vulnerable in our society who will benefit most from being insured,” Levy said.
During the meeting of the IDF, the leadership of the forum announced the formation of a total of seven working groups targeted to specific project goals. The working groups will report to the High Level Steering Group in September in the margins of the UN General Assembly.