UNDP launches Insurance & Risk Finance Facility, ILS support anticipated

The United Nations Development Programme (UNDP) has today launched the Insurance and Risk Finance Facility (IRFF), a new initiative that aims to build financial resilience and bridge a $1.4 trillion global health, mortality, and disaster protection gap, with support from the insurance-linked securities (ILS) market expected in future.

Importantly, this Insurance and Risk Finance Facility (IRFF) will work to channel risk to private insurance, reinsurance and capital markets over-time, and aims to significantly increase the role of insurance and risk-financing in development.

The German Government has contributed €35 million in funding to the Facility, which will be used for technical work and capacity building on the ground, as well as for the development of new insurance products.

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Germany contributes $40.9M to risk transfer initiative

The United Nations Development Programme said Monday that the German government has contributed €35 million ($40.9 million) in funding for a new risk transfer initiative, the Insurance and Risk Finance Facility, within its Finance Sector Hub.

The goal is to co-create insurance and risk finance solutions in over 50 developing countries by 2025 and contribute to the InsuResilience Vision 2025 target of protecting 500 million poor and vulnerable people by 2025.

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Weather disasters drive US $ 3.64 trillion in losses in 50 years: WMO data

The high costs of weather disasters around the globe is truly laid bare by the latest data from the World Meteorological Organization (WMO), which estimates that weather, climate and water related disasters drove some US$ 3.64 trillion in losses over the last 50 years.

The WMO’s latest Atlas of Mortality and Economic Losses from Weather, Climate and Water Extremes covers the period from 1970 to 2019, during which over 2 million lives were lost to these disasters.

That is from more than 11,000 reported disasters recorded, and during the period the research found that weather, climate and water hazards accounted for 50% of all disasters, 45% of all reported deaths and 74% of all reported economic losses, while more than 91% of these deaths occurred in developing countries.

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Catastrophe bonds marked down on hurricane Ida threat

A number of catastrophe bonds have been marked down in end of month secondary market pricing sheets, with some of the anticipated names suffering declines of between 25% and 35% in value.

After hurricane Ida’s devastating landfall with 150 mph winds in Louisiana on Sunday it was always anticipated that there would be a mark-to-market reaction in catastrophe bonds.

The majority of insurance-linked securities (ILS) fund managers seem relatively comfortable that cat bond losses will be largely mark-to-market from the hurricane, as long as the industry loss remains in the current estimated range of around $15 billion to as high as $25 billion.

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Cat bond market can grow to $50bn, pandemic risk & ESG are drivers: Swiss Re

After a particularly busy first-half of 2021 for catastrophe bond issuance, global reinsurance firm Swiss Re’s Capital Markets unit believes that a $50 billion market is possible by 2025 and that two drivers of further insurance-linked securities (ILS) market growth could be pandemic risk and ESG.

In its latest Insurance-Linked Securities Market Insights report, Swiss Re Capital Markets highlights the robust issuance seen in H1 2021.

“With new capital raised, many primary new issues were heavily oversubscribed and upsized, while also testing lower spread levels than originally announced,” the company explained on the prior year.

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Germany & China see costliest disaster losses ever from July flooding: Aon

Both Germany and China have experienced their most costly insured natural disaster loss events in history in July, with both largely related to the impacts of devastating flooding, according to insurance and reinsurance broker Aon.

Germany is expected to face around US $20 billion in economic losses, while across Europe the July flood event is estimated to have cost more than $25 billion.

Of this, Germany is estimated to be facing $5.3 to $6.5 billion of insurance and reinsurance market losses from the flooding, while the rest of Europe is anticipated to be facing at least another US $1.2 billion of insured losses as well.

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Jamaica’s World Bank catastrophe bond could upsize to $185m

The first catastrophe bond for Jamaica, which as we were first to report ten days ago launched as a $175 million IBRD CAR 130 transaction with the support of the World Bank, is now said by our sources to have a chance of closing a little larger, at $185 million in size.

The $175 million or greater catastrophe bond seeks a capital markets backed source of named tropical storm and hurricane disaster insurance protection for the government of Jamaica, on a parametric trigger basis.

As we’d also reported recently, important grant agreements had been signed and as a result the first catastrophe bond for Jamaica was expected imminently.

That proved correct, when our sources told us the deal had been launched to investors ten days ago and we reported on the structure being offered and the protection it will afford to Jamaica’s government.

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China’s government supportive of Hong Kong’s ILS strategy: ILS Asia 2021

As options to issue insurance-linked securities (ILS) and catastrophe bonds expand in Asia, with the introduction of Hong Kong as a regulated ILS platform, attendees at our virtual ILS Asia 2021 conference this morning heard of the support China’s government is offering to the initiative.

Our virtual ILS Asia 2021 conference, held in association with headline sponsor AM RE Syndicate Inc., began today with a keynote interview with Mr. Simon Lam, Executive Director, General Business at the Hong Kong Insurance Authority.

This interview can now be viewed on-demand here.

Hong Kong already has an established insurance and reinsurance market, while its legislative preparations for ILS were completed at the beginning of 2021.

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UZBEKISTAN: UNDP helps develop the insurance sector in Uzbekistan

UNDP, together with the Agency for the Insurance Market Development at the Uzbek Ministry of Finance, organized a seminar on June 24, 2021, during which the results of the diagnostics of the development of inclusive insurance and risk financing in Uzbekistan were presented, UzDaily.uz reports.

It was noted that due to the vulnerability of Uzbekistan to natural disasters, which can bring devastating consequences for the economy and the population, as well as the insufficient development of the insurance market and the lack of tools for inclusive insurance and risk financing, the government, enterprises, and households of the country suffer financial losses amounting to millions of USD.

UNDP established a special Risk Insurance and Financing Fund (Mechanism) to provide technical assistance to countries participating in the climate risk insurance program, including Uzbekistan, to develop inclusive insurance, financing sovereign risks, and integrate insurance into development planning and financing processes. At the first stage, the task was set to diagnose the insurance industry in the country, and the results of this study, as well as the recommendations of experts on the development of this sector, were discussed during the seminar.

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Kazakhstan: Almaty nonchalant over earthquake fears

As Kazakhstan awaits the Big One, its seismologists are underfunded while ever-taller buildings rise in the earthquake-prone commercial capital.

Nur-Sultan may be cold and windy, but at least earthquakes aren’t a concern.

That was Andrei Krasilnikov’s thought when he moved to the capital from Kazakhstan’s mountain-fringed business metropolis, Almaty.

“It was a shame to have to leave our hometown. We have beautiful mountains there, which we don’t have here,” Krasilnikov, an activist opposed to the rapid spread of high-rise construction, told Eurasianet. “But Almaty is in a seismic zone, and I want to live in peace and not have to worry about my family.”

By way of an example, Krasilnikov points to a recently unveiled project to build several dozen 17-story apartment blocks in a tightly packed residential area of Almaty.

“These kinds of ghettos will become a mass grave if there is a powerful earthquake, since rescue equipment will not even be able to drive up through the rubble,” the activist said.

The fears are not without basis. Almaty is in a seismically active region. Mild tremors are fairly common. And seismologists are predicting that a powerful tremor could occur within the coming decade.

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