Vanuatu becomes second country in the Pacific to launch Micro-Insurance Product that will protect climate vulnerable populations against the adverse financial impacts of extreme weather hazards
The UN Capital Development Fund (UNCDF) has launched a new micro-insurance product in Vanuatu that is designed to protect climate vulnerable populations against the adverse financial impacts of extreme weather hazards.
This financial product was developed by the Pacific Insurance and Climate Adaptation Programme (PICAP) and will be piloted in Vanuatu over the next 12 months, in partnership with private insurance firm, VanCare Insurance Limited, and the Reserve Bank of Vanuatu. The design was funded by the Governments of New Zealand and Australia.
The product works by providing a quick injection of relief funds within 10-14 days following a natural disaster, and is aimed at Vanuatu’s smallholder farmers, fishers, MSMEs and people with disabilities. This will be the first time these groups can access insurance to protect themselves against hazards such as cyclones.
While launching the product in Port Vila, New Zealand High Commissioner to Vanuatu, Nicola Simmonds, said: “The launch of insurance product in Vanuatu is an important step towards reducing risk and increasing resilience to climate change. We are pleased to see climate risk insurance products that address the specific needs of small holder farmers, fishers and other vulnerable groups, including women and youth, and are affordable and accessible.”
“This product is responding to a market gap and a persistent development challenge: the non-availability of financial instruments in the immediate aftermath of a natural calamity for low-income households.”
The product will be available in two price ranges: one offering a maximum coverage of 50,000VT (US$400) and the other of 100,000VT (US$800) at a premium of 10% per annum for both.
To further enhance the speed and efficiency with which payments will be processed, the funds will be sent directly to the mobile money wallets of policy holders, or to their bank accounts via internet banking.
Vanuatu is the second country in the Pacific to have access to such a climate disaster risk parametric micro-insurance instrument after Fiji where the product has been rigorously tested since August 2021.
“FijiCare and VanCare are delighted to continue their commitment towards developing inclusive insurance markets in the Pacific” said the Group Chief Information Officer for FijiCare Insurance Limited, Ronald Narayan.
Narayan added that the product is a game changer, ensuring farmers have some form of protection against loss and damage, which happens all too frequently in Vanuatu, it is also market-based, allowing it to be competitively traded in the open marketplace. This makes it an attractive proposition for private insurers like FijiCare and VanCare.
The Deputy Governor of the Reserve Bank of Vanuatu (RBV), Noel Vari, said: “After consultative workshops with the Programme team and the underwriting insurance company, we are confident that the parametric insurance being piloted today is going to be a key tool in the basket of targeted financial solutions Vanuatu is providing to reduce the impact of extreme weather events on our most vulnerable communities.”
During the pilot phase, the underwriters, VanCare, will aim to sign up 200 beneficiaries before the start of Vanuatu’s cyclone season this November.
RBV’s role involves closely monitoring and providing feedback on how the product works and interacts with the country’s regulatory framework during this period, before it is scaled and made available to the wider population.
PICAP has brought together an ecosystem of public, private and NGO/CSO stakeholders and local communities in the country to ensure everything from customer onboarding and awareness to regulatory compliance is addressed comprehensively.
The Programme is jointly implemented by UNCDF, the UN University Institute for Environment and Human Security (UNU-EHS) and UN Development Programme (UNDP) and is funded by the Governments of Australia and New Zealand.
Peter Wilson, First Secretary Australian High Commission said the local communities’ involvement in product development would ensure it met their needs and would improve uptake. “Besides the Vanuatu community, UNCDF has managed to bring together an impressive group of private sector partners, specialist UN agencies, regulators, and NGOs to ensure this initiative is a success,” said Wilson.
This story was originally published at UNCDF on 16 October 2022, reposted via PACNEWS.