Finance and insurance solutions InsuResilience Investment Fund (IIF)
The InsuResilience Investment Fund (External link) (IIF) is based on two sub-funds that are meant to improve access to insurance in developing countries. This is intended to reduce the vulnerability of micro, small and medium enterprises (MSMEs), smallholders and low-income households to extreme weather events and enhance their adaptation to climate change.
Loans and equity
The IIF targets countries in which climate risk insurance is not yet available or still under development. It provides loans to, and makes equity investments in, financial institutions and insurers in these countries, enabling them to offer insurance to their clients against the impacts of climate change.
Not only clients profit because they then have cover in the event of a climate-related disaster and can continue their business activities – the financial institutions profit as well because they no longer lose clients when an extreme event occurs. This contributes to the country's debt sustainability and economic stability.
Technical solutions
Moreover, the IIF also invests in providers of the technologies needed for modern agriculture, such as data platforms for climate data and information, and weather stations for the reliable measurement of weather and climate data.
The Fund's investments are helping in India, for instance, to set up automated weather stations and offer other services for weather insurance in rural districts.
Technical advice
The IIF's partners benefit not only from the Fund's financial resources but also from the comprehensive technical advice that is key to developing and improving needs-driven climate risk insurance products.
Furthermore, the Fund can offer premium support facilities in the difficult start-up phase until insurers are able to provide insurance fully out of their own resources.
This targeted support is complemented by overarching training services for key government entities, by cooperative ventures with the research community, and by awareness-raising campaigns on the negative impacts of climate change and insurance options for people affected by these impacts.
Public-private partnership project
By mid-2024, the IIF had granted loans to its partners totalling more than 207 million US dollars and had made equity investments amounting to more than 97 million US dollars. The Fund now invests in 40 partners on four continents. As of 30 June 2024, these activities had provided more than 76 million beneficiaries with cover against weather risks.
The Fund is a public-private partnership project: in addition to public funding from KfW and other donors such as the European Investment Bank, it also mobilises private sector capital, for instance from the Open Society Foundation. More than one third of the capital currently paid into the Fund or pledged to it already comes from private investors who would possibly not have dared enter the still nascent insurance markets in developing countries without the KfW activities.
Germany also uses the Fund to support the world's largest private climate risk insurance programme, the African and Asian Resilience in Disaster Insurance Scheme (ARDIS) (External link) run by VisionFund International (External link), a microfinance organisation.
As at: 23/10/2024