The UN Capital Development Fund (UNCDF), UN Development Programme (UNDP), and UN University Institute for Environment and Human Security have developed a local market ecosystem in the Pacific for micro and meso insurance solutions.
This ecosystem of private and public sector partners will help provide micro and meso insurance solutions tailored to the needs of the region.
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The Pacific Insurance and Climate Adaptation Programme (PICAP), a multi-stakeholder initiative specialising in parametric or index micro-insurance, has been introduced, trialled and scaled to meet the region’s challenges.
Payouts are dependent on pre-set triggers including windspeed, with no requirement for loss evaluations.
Presently, 44,813 households, including 20,962 women, are covered by climate-based parametric insurance products in Fiji, Samoa, Papua New Guinea, Tonga and Vanuatu.
The UNCDF and UNDP convened this ecosystem to leverage the insurance sector’s potential and build local market capacity.
PICAP has established various regional and global partnerships, encompassing farmer cooperatives, NGOs, regional central banks, government ministries, mobile network operators, private insurers and companies like Lloyds and SCOR.
The offering is crucial as the UN identified a current protection gap in the Pacific region that affects low-income earners including farmers, fishers, micro-businesses and informal sector workers.
However, it said that by 2024: “PICAP’s investments had already begun reshaping the Pacific’s insurance landscape and driving new innovations.”
A total of 37 new or improved versions of parametric products were introduced across eight Pacific countries, reaching 44,813 households and 2,000 social welfare recipients.
In Fiji alone, more than 1,600 payouts totalling almost F$300,000 ($131,265) were made following rainfall events.
Local insurers such as Sun Insurance and Tower jointly developed solutions, with F$3.1m in private-sector investments injected into the ecosystem.
In partnership with the UN Office for Disaster Risk Reduction, a “market-driven” scheme was launched in Fiji in 2024 that delivers 20% of the total sum insured before a cyclone strikes.
To de-risk Pacific markets, the UNCDF is collaborating with partners for an insurance guarantee and premium financing facility.
This initiative aims to ease the burden on insurers by pre-financing insurance premiums through “concessional” loans.
