Catlin to chair new industry forum driven by UN and World Bank

Leaders of the United Nations (UN), the World Bank Group and the insurance industry have announced the formation of the Insurance Development Forum (IDF).

The formation of the forum was formalised at a meeting in Washington, DC. The IDF aims to incorporate insurance industry risk measurement know-how into existing governmental disaster risk reduction and resilience frameworks and to build out a more sustainable and resilient global insurance market in a world facing growing natural disaster and climate risk.

The IDF will be led by a steering group of senior leaders from the insurance industry and governmental institutions supported by an executive secretariat, housed at the International Insurance Society (IIS).

It will be chaired by Stephen Catlin, executive deputy chairman, XL Catlin; deputy chair IIS and chair of the Association of Bermuda Insurers and Reinsurers. Hi co-chairs are: Joaquim Levy, managing director and World Bank group chief financial officer, and former minister of Finance of Brazil; and Helen Clark, administrator of the United Nations Development Program (UNDP), and former Prime Minister of New Zealand.

The announcement followed a keynote address by the UN Secretary General Ban Ki-Moon at a planning conference last week with many chief executive officers of the industry, which emphasised the critical role that the insurance industry can play in building natural disaster resilience and helping meet the UN’s sustainable development goals.

The organisations said that in the developing world today, more than 90 percent of economic costs of natural disasters are uninsured; known as the Protection Gap. The IDF Mission is to better understand and utilise risk measurement tools that will help governments apply that knowledge at multiple levels in order to better deploy governmental resources targeting resilience to protect people and their property.

During its inaugural meeting, the IDF established four priority work streams: understanding risk; risk and insurance regulation, legislation and policy; risk sharing, transfer and response; and risk and resilience.

The formation of seven working groups targeted to specific project goals was also established. The working groups will report to the High Level Steering Group in September in the margins of the UN General Assembly.

The IDF acts as a forum to enable the optimal coordination of insurance related activities; the development of shared priorities; the mobilisation of collective resources; the development of strategic and operational relationships within and between governments, industry and international institutions; and, the avoidance of unhelpful and unnecessary fragmentation of efforts and resources. These collective actions can help close the Protection Gap, it said.

Catlin said: “My grandchildren expect me to make responsible decisions that affect their future. Insurers’ risk management skills help us assess natural disaster risk and can be exported to allow governments at all levels to reduce future losses by designing in resilience into infrastructure projects; and in increasing the use of insurance as a pre-disaster economic resource to allow people to protect their families, property and assets. Risk identification, measurement, pooling and diversification are essential features of any successful insurance programme and regulation must recognise their value and purpose.

“These skills can increase the utilization of insurance which will reduce the reliance on post-disaster aid and better target resources to the most important and needed humanitarian crises. Research has shown that a 1% increase in insurance penetration can reduce the disaster recovery burden on taxpayers by 22 percent.”

He added: The IDF brings together the resources of the broader insurance industry reflected in the membership of the International Insurance Society, The Geneva Association, the International Cooperative and Mutual Insurance Federation and the Association of Bermuda Insurers and Reinsurers.”

Levy added: We have seen growing demand from our client countries for solutions to manage the costs from disasters effectively, and this is best done by specifically addressing the different layers of risk. However, the insurance market is close to non-existent in many countries. Consequently, the formation of the IDF is a pivotal moment, with all the actors in the insurance industry coming together and strengthening partnerships. It can play an important role in people’s lives, whether it is with micro insurance for natural disaster risk, protection against pandemics or protection of assets.

“We, at the World Bank Group, are focused on eradicating extreme poverty and boosting shared prosperity. With only about 17 percent of people in low and middle income countries with financial savings and insurance, compared to 45 percent in high income countries, it is the most vulnerable in our society who will benefit most from being insured.”

Michael O’Neill, assistant administrator, UNDP, (on behalf of co-chair Helen Clark, administrator UNDP), highlighted the importance of public and private partners coming together, saying that “It [had] been a long time coming and that the insurance industry and the international community need each other.”

He added: “For the good of our planet, and especially for those countries and communities vulnerable to disasters. We at UNDP believe that the IDF has the potential to put vulnerable economies and societies on a path to green, risk-informed, and sustainable future. And in the process, to change the way we, in development agencies, and our partners in the private sector do business together.”