The Road to COP28: Actions Speak Louder than Words

Climate Change Resilience

By Kipkorir Koskei

Following the IDF Summit in June, which brought together governments, international organisations, civil society and academia to enhance financial resilience and inclusivity in the face of climate change, Kipkorir Koskei, IDF Director, Strategic Partnerships & Policy looks ahead to COP28, and identifies the different roles insures can play in global adaptation and resilience measures 

November’s COP28 in UAE will mark eight years since the Paris Agreement was signed – a global effort to halve emissions and limit global warming to 1.5°C by 2030. However, with only seven years left until this deadline, it is now accepted as almost inevitable by most experts that we will not achieve this goal, and the focus is now equally on adaptation and resilience measures in the face of the escalating impacts of climate change on the most vulnerable among us. 

Insurance and related risk management tools are key pieces of this puzzle. On its own, insurance is not the antidote to the threat that climate change poses, nor does it provide a total safety from its impacts, but combined as part of proactive ex-ante disaster risk financing measures that span public, private and development sectors, insurance is increasingly accepted as a powerful resilience tool. 

This is the major message as we head towards COP28, and it was unpacked further at June’s pre-COP28 convening in Zurich, Switzerland – the Insurance Development Forum (IDF) Summit 2023. This Summit is the flagship event convening a community of partners with global reach and local presence including governments, international organisations, civil society and academia with the purpose of driving forward ambition, action and impact in enhancing financial resilience and inclusivity, and advancing the United Nations Sustainable Development Goals.  

The Inextricable Link Between Insurance and Climate Change Resilience

One prominent theme that emerged from the event was the undeniable need to be honest and acknowledge the truth that is laid bare before us: current efforts to “build back better” are falling short, and despite the urgent action that we all know is needed, it is unlikely that humanity will be able to prevent global temperatures from exceeding the critical threshold of 1.5 degrees Celsius.

Leaders expressed a shared ambition to scale up collaboration efforts and increase the implementation of Insurance Development Forum projects. By leveraging the collective expertise and resources of insurers, governments, and other stakeholders, these initiatives can drive sustainable solutions and foster resilience on a larger scale.

After all, systems don’t change – leaders do. Embracing a culture of innovation and continuous improvement allows us to refine our approaches and drive positive change in building resilience against climate change. But political short-termism must be overcome. Recognising the long-term impact of climate change, leaders emphasised the need to focus on sustainable projects and prioritise education. By educating individuals and communities about the importance of resilience measures, we can lay the foundation for a more resilient future.

At the same time, the importance of goodwill and trust in the insurance sector particularly among the underinsured and uninsured is critical to closing the protection gap. We also anticipate further strong appeals at COP28 for increased investments from insurers in resilience, including resilient infrastructure, and for the development of methods to measure the value of these initiatives. Demonstrating the return on investment in resilience can encourage all stakeholders including the private sector to prioritise such investments and further drive climate change resilience efforts.

The Shift to Ex-Ante

For those in developing countries, this protection gap means that people, communities and even whole countries, are unable to recover quickly and efficiently following a natural disaster. To help overcome this, insurance has to be inclusive, and insurers have to be focused on ex-ante investment. It is imperative for the sector to invest wisely and reduce the impact of a devastating event, rather than pay out after one has occurred.

This mindset forms the basis of the Early Warnings for All initiative, a $3.1bn plan announced by the UN’s secretary-general António Guterres during COP27. The project (updates of which will be announced at COP28) aims to ensure that by 2027, the world’s population will be protected by weather warning systems – a move which could both limit damage and save lives. 

Model examples

Advocating ex-ante financing isn’t, however, the only way insurers can help build global resilience and support adaptation measures. Ensuring open data and access to data tools is proving to be just as effective, as has been made apparent by the Global Resilience Index Initiative (GRII). Led by the IDF’s Risk Modelling Steering Group, and supported by technical contributors including the University of Oxford, the Oasis Loss Modelling Framework, Willis Towers Watson and the World Bank, the GRII aims to provide reference data on climate and natural hazard risks to help countries manage their exposures to increasing climate risks.

Such a goal is being achieved through its GRII Viewer, a tool which provides the initial set of ‘people’ ‘planet’ and ‘prosperity’ indices that will guide financial decisions to scale up adaptation and help build regulatory and industry capabilities around modelling natural catastrophe risk. First announced at COP26, the GRII Viewer is expected to be fully launched at COP28.

As UN Special Representative for Disaster Risk Reduction, Mami Mizutori noted at the IDF Summit 2023, “Currently, we know that only about 4 percent of all official development assistance related to disasters goes into prevention; the rest goes into response and recovery. But there is not much evidence that recovery is building back better.

It seems that we are doing more of building back the same – and that’s simply not enough in the face of increasing climate change risk. GRII helps point to where action is needed and can have the most impact. This is about building resilience, this is about reducing the risk. That’s what we’re not doing yet.  It’s about bringing in investment and resources before the disaster happens and working together for a resilient climate future.”

During the IDF Summit, the GRII secured a fresh agreement from the UN, insurance and academic leaders to draw upon insurance data and expertise to advance climate and disaster risk analytics and help mobilise finance for adaptation. New funding was also provided for the initiative, to provide open, globally consistent climate risk data for governments and financial institutions to scale-up climate adaptation, resilience and loss and damage finance and protect exposed communities and economies.

Accelerated risk needs accelerated action

As climate change accelerates, the stakes are getting higher for people, businesses and governments around the world.  Putting globally consistent numbers behind who and what is most at risk, and how people, prosperity and the planet will be impacted is essential to guide capital investments in adaptation.   

But while data is key to building global resilience, sometimes it is not available to all: without doubt, insurers have a collective responsibility to change this. This is where initiatives such as the Global Risk Modelling Alliance (GRMA) come into play. 

Launched with the V20 Group of Countries and co-funded by the BMZ and IDF insurance industry members, the GRMA increases the availability of risk information to climate-vulnerable countries. 

This initiative is so important that the Global Shield against Climate Risks cooperation has identified it as a key resource to helping it deliver on its own ultimatum: to increase protection for poor and vulnerable people by substantially enhancing pre-arranged finance, insurance and social protection mechanisms against disasters. 

With projects already underway in Pakistan, the GRMA has confirmed its reach will be expanded and progressed at COP28, with more pathfinder countries expected and wider applications of the modelling tools to be announced. 

Closing the protection gap

High-ambition scale is needed to close the protection gap, and leaders at the IDF Summit 2023 underscored the need to move away from pilots to scaling up existing programmes for lasting development impact. There was also strong support for further multi-stakeholder partnerships that drive action, particularly in relation to working across public, private and humanitarian sectors to build resilience to climate shocks. 

One of the initiatives announced during the IDF Summit that will be progressed at COP28 is  Tripartite 2.0. An initiative Led by the IDF Sovereign and Humanitarian Solutions (SHS) Working Group, the United Nations Development Programme (UNDP) and Federal Ministry for Economic Cooperation and Development (BMZ), together with the InsuResilience Global Partnership and InsuResilience Solutions Fund (ISF), the Tripartite Agreement aims to develop effective climate risk financing and insurance programmes for vulnerable communities. 

To date, members of the Tripartite Agreement have established projects in Mexico, Colombia, Nigeria, Ghana and Peru, and upon successful implementation, around 18 million people will benefit from these projects. 

Protecting the future

At COP27 in Egypt there was significant momentum generated around the important role that insurance can and must play in driving resilience. As we head towards COP28, there is a strong sense of urgency for efficiency and scale in implementation and help to shape a way forward. 

The IDF is active in 22 countries, with 29 projects currently underway, and is a strong advocate for the critical, tangible and impactful role of public and private partnerships, and in open risk management tools, in building a more resilient future. 

We are living the reality of a climate emergency, and there is a global expectation that leaders from the public, private and development sectors need to act fast. For COP28, the IDF and its partners are engaging across sectors to seek convergence on the climate adaptation and resilience agenda, develop collective responsibility and ownership by partners, members and countries with an emphasis on the need to work better, to work together and deliver real impacts at scale.

About the Author

author's imageKipkorir Koskei is the Director of Strategic Partnerships and Policy at the Insurance Development Forum, a public-private partnership led by the insurance industry and supported by the World Bank and the UN, aiming to enhance the use of insurance to build greater resilience against disasters and help achieve the UN Global 2030 Agenda.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.