Navigating Resilience: PCRIC’s COP28 Side Event on Parametric Insurance

PCRIC successfully hosted its inaugural side event at COP28 in Dubai, themed ‘Embedding Parametric Insurance in the DRF Toolkit at COP28.’ The event, held at the Blue Pacific Pavilion and supported by the Pacific Islands Forum Secretariat (PIFS) & the Secretariat of the Pacific Regional Environment Programme (SPREP), featured distinguished panelists.

Keynote speakers included Honorable Hu’akavameiliku, the Prime Minister of Tonga and Mr. Ben Ponia, Chief of Staff, Office of the Prime Minister, Cook Islands. The panel comprised representatives from prominent organizations, including the World Food Programme, Global Shield Secretariat, Organisation of African, Caribbean and Pacific States (OACPS), and the United Nations Capital Development Fund (UNCDF). PCRIC’s Resident Director, Ms. Tine Ponia also formed the panel.

Under the guidance of Mr. Karlos Moresi, Programme Adviser – Resilient Development Finance at PIFS, the discussions allowed panelists to offer their distinctive insights into the roles of their organizations concerning resilience building efforts. Furthermore, the panel delved into crucial topics, including the importance of risk pooling, the potential backing from the Global Shield financing architecture, and the vital role of parametric insurance, coupled with premium support, in nurturing resilience.

To commence the panel, Honorable Hu’akavameiliku highlighted that, “in Tonga we have programs aimed at building resilience, but resilience speaks to the capacity and the ability to bounce back after some form of natural impact or shock.”

“Parametric insurance as provided by PCRIC is now a firm staple of Tonga’s disaster risk management strategy. In addition to affirming the importance of parametric risk pooling insurance to a well-equipped DRF toolkit, it is important that I too take this opportunity to recognise the support of the international community,” he continued.

Honorable Hu’akavameiliku added, “consider resilience as more than just the capacity to survive in the aftermath of adversity. I think I speak on behalf of all small and vulnerable nations when I say that we are aiming for a resilience that shapes mindsets and strategies to evolve from reactive to proactive and that helps us thrive.”

Representing Honorable, Mark Brown, the Prime Minister of the Cook Islands, Mr. Ben Ponia, paid homage to Pacific Leaders, recognizing their dedicated efforts in advocating for action against the climate crisis. He noted that, “their courage, taking the big center stage, speaking out. That’s been going on relentlessly, and now we’re seeing the progress of [that hard] work.”

He continued saying that, “parametric insurance is an incredibly valuable tool. I’d like to thank Germany for its contribution to the [Pacific Resilience] fund. It’s enabling the Cook Islands to increase the value of its policies. And for the first time, because we have been budgeting and paying for this insurance product, we can draw on that subsidy.”

Shifting the conversation to PCRIC’s international partners, the Global Shield Secretariat’s Dr. Astrid Zwick emphasized that, “PCRIC is a very, very strong and key partner to us in the Pacific region and we’re happy to have this partnership and a strong ally working here and helping us in the larger context of closing the protection gaps.”

“The protection gap is huge, that means that only up to 1% or 2% of the losses are basically covered. That means people are suffering, that means people need to get some help, and help we can find through pre-arranged finance. Pre-arranged finance is important because you also learn about how to manage your risks, understand your risks better and then work out and develop the right instruments that need to be taken,” she explained.

Offering a valuable insight gained from experience in handling parametric products across different global regions, the World Food Programme’s representative, Mr. Gernot Laganda clarified that, “insurance is not going to be a silver bullet solution. It needs to be integrated with other risk management approaches, for example pre-positioning finance from a public fund, it could be Loss & Damage fund, a trust fund, public money, climate money, and then triggering this on the basis of early warning triggers. We call this anticipatory action.”

Referring to the regional risk pools, Ms. Cristelle Pratt from the OACPS expressed that, “there is a lot to be had by looking at inter-regional cooperation, collaboration, sharing and exchange. Every opportunity for these companies to work together to actually raise the importance and the necessity of such instruments but also to exchange experiences. These inter-regional engagements are extremely crucial.”

Addressing the fundamental difference between the work of PCRIC and the UNCDF, Mr. Krishnan Narasimhan reiterated that, “PCRIC is a sovereign level insurance where the government is the policyholder. In the type of intervention which we facilitate through the market system, local insurance companies are technically and financially capacitated to offer appropriate and affordable parametric insurance at the micro level targeted at low-income households.”

To conclude the side event, Ms. Tine Ponia shared the direction of the Board where, “the journey ahead is one that necessitates collective actions and shared responsibility. In that regard, we extend an invitation for continued partnership and engagement from the international community. Your collaboration is essential in bolstering our capacity to do the work that we do at PCRIC.”

She spurred the audience saying, “let us reaffirm our unified commitment to protecting and empowering our Pacific Island nations through our joint efforts in collaboration, innovation, and shared determination. We are not just confronting challenges – we are paving the way for a resilient and sustainable future.”

The insightful perspectives shared by both the keynote speakers and panelists are poised to significantly contribute to advancing the discourse on shaping the future landscape of disaster risk financing and fortifying resilience across the Pacific region.