Climate Insurance Fund II (premium subsidy)

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Developing countries (DCs) are particularly hard hit by the increase in environmental disasters as a result of climate change and, relative to their economic strength, suffer higher losses due to natural disasters than OECD countries. Households, companies and public authorities in DCs generally have little or no access to insurance solutions that could help manage the economic consequences of severe weather disasters and facilitate adaptation to climate change. As a contribution to climate adaptation, the German G7 Presidency in 2015 therefore launched the InsuResilience Initiative, followed by the G20 InsuResilience Global Partnership. The InsuResilience Investment Fund (IIF, previously known as the Climate Insurance Fund) is a contribution of German Financial Cooperation (FC) to this initiative. The IIF aims to increase the capacities in DCs to deal with the consequences of and adapt to climate change by improving the supply and use of extreme weather insurance. These help to reduce the follow-up costs and the associated financial and sometimes existential risks for poor and vulnerable people (such as low-income households, microfinance customers and agricultural businesses in developing countries). The fund also pursues the further development of insurance products for investors in order to provide additional incentives for adaptation measures to climate change. In order to achieve these goals, the IIF grants equity investments as well as loans, guarantees or so-called contingency loans to insurance companies or intermediaries working with them (e.g. brokers and financial institutions). In addition to the financing measures, advisory and training measures are financed for the development of needs-based insurance, the strengthening of the investment companies, the design of simple, understandable and fair insurance policies in the sense of responsible finance and, if necessary, measures to promote the basic financial education of the policyholders (financial literacy). In order to enable the development of financially sustainable insurance solutions for extreme weather risks, the IIF will also support market development in the reinsurance sector if necessary. In order to support the introduction of new insurance products, the Fund will also provide temporary and limited amounts of funds to reduce insurance premiums for end-insured persons.