Pacific Insurance and Climate Adaptation Programme

The Pacific Small Islands Developing States (PSIDS) are highly vulnerable to natural hazards. However, they have limited capacity to effectively manage the risks and overcome the significant economic losses after a disaster. Presently, there are limited ex-ante financial instruments (government reserve funds and contingent credit) available in most Pacific countries and the ex-post financial instruments deployed are usually reallocated from government budgets, acquired through external and internal borrowing or the result of donor assistance and international humanitarian aid.

While many PSIDS have developed national and sub-national Disaster Risk Management (DRM) plans, no country has an integrated Climate Disaster Risk Financing (CDRF) strategy to better manage economic losses after a disaster. Although there is awareness on CDRF learnings available globally, the capacity to access and accelerate its usage in the Pacific context remains a challenge among PSIDS to progress towards blue/green economy. With several  innovative ex-ante CDRF tools and instruments emerging in the global markets, there is opportunity to introduce, test and scale market-based CDRF instruments like parametric insurance targeting the vulnerable and low income populations in PSIDS. This is proven with some of the learnings and findings produced from the PFIP projects on micro-insurance.

The United Nations Capital Development Fund (UNCDF), through a joint programme with the United Nations Development Programme (UNDP), the United Nations University Institute for Environment and Human Security (UNUEHS), and in close collaboration with key stakeholders from the government, public, private sector and other development partners, aims to address the challenge through the workstreams envisaged in the Pacific Insurance and Climate Adaptation Programme. The Programme is aligned to the United Nations Pacific Strategy, UNCDF global strategies and the respective country national development plans. The Programme will specifically target women, youth and MSME segments to work across agriculture, fisheries, and tourism sectors.

The overall program objective is to improve the financial preparedness of “Pacific households, communities, small businesses, organisations and governments towards climate change and natural hazards” through a combination of stakeholder engagement, co-creation of solutions, awareness and capacity building, innovative financing options and digital linkages – with a robust interface to the 2030 Sustainable Development Goals.