[Event Recap] Nine countries meet to expand their DRFI initiatives with the World Bank

In the beginning of October, ZEP-RE – the COMESA region reinsurer[1] - facilitated a discussion between East African Insurers Supervisors Association (EAISA) and the World Bank (WB) focusing on disaster risk financing and insurance (DRFI) initiatives in their respective markets. Supervisors from the countries: Burundi, Democratic Republic of Congo, Kenya, Malawi, Somalia, Tanzania, Uganda, Zambia, and Zimbabwe, had previously expressed interest in DRFI and its value in their countries through public private partnerships after learning about these in the Annual Insurance Regulators Forum. 

The goal of the meeting was to explore how different DRFI initiatives are adapted to different country contexts, while also addressing key socio-economic issues such as enhancing household incomes and improving resilience to climate-related disasters. As well as to better understand the exact role that insurance can play. Currently, domestic insurance markets in emerging markets and developing economies are underdeveloped leading to a substantial protection gap for climate and disaster risks. Increasing financial resilience can not only protect vulnerable communities but also contribute to sustainable development. Climate and disaster risks materialize in different shapes and sizes, some are high in frequency and low in severity, and others extremely severe but of low frequency of occurrence. This means that no single instrument can address all risks, and it is important that insurance is utilized to manage the right types of risks. Typically, for a government, a combination of budget reserves, contingent credit, and risk transfer is the most suitable, and the same is true for firms and household  savings, credit, and insurance. The supervisors were keen to meet with the World Bank and ZEP-RE as they both have experience supporting the implementation of DRFI strategies to different country contexts from different perspectives. For example, ZEP-RE is the current implementer for the financial resilience component of DRIVE, a World Bank led project which works as a regional platform that supports pastoralists access to financial tools for increased resilience.

During the meeting, several regulators raised the fiscal challenges their countries faced as an obstacle to implementing DRFI, and the discussion focused on how some World Bank instruments could help with this.