The majority of the world's population has no protection whatsoever against existential risks. Most people are defenceless for instance against storms or disease. Insurance in various ways should help alleviate some of the impact of disasters by providing rapid assistance to the people affected in the form of emergency aid packages. They may for example receive food, water and medicines, but also animal feed and seeds in order to help them get through the initial period following a disaster. Therefore insurance is regarded as a promising instrument also for development cooperation.
"Cross a river in a crowd and the crocodile won't eat you."
This African proverb illustrates the fact that
risks are easier to manage if they are shared –
the fundamental concept of insurance
First insurance approaches are being designed and implemented in different regions of the world, for example in the Pacific, where the small-island states are endangered by cyclones and rising sea levels, or in the Caribbean. The intention is always the same: protect poor people from extreme weather events or other existential risks. KfW is one of the front runners in developing new ways of insuring the vulnerable. For instance with the African Risk Capacity which is assisting African countries in case of drought.
Bangladesh: Climate change endangers primarily poorer countries
Smallholders are particularly at risk because their livelihoods depend on the weather, which is becoming increasingly unpredictable due to climate change. Insuring against some of this risk helps the actual families affected in the first instance. But the benefit extends much further, since the farmers of this world produce all of our food.
Food production will have to increase again by more than 50 % by the middle of the century in order to feed everyone.
Egypt: Water needed for any growth
400 million
That's how many more people the G7 countries want to insure against climate-related risks such as droughts or floods by the year 2020. KfW on behalf of the German government is participating in various programmes to help achieving this goal.
Drought in Senegal:
Now insured, thanks also to KfW
Every year, 100 million people fall into poverty because they have to pay for their treatment and medication themselves in the event of sickness.
This is why the international community has resolved to ensure everyone access to adequate healthcare within the next 14 years. Health insurance plays an important part in this endeavour.
Health insurance: Not at all
common for most people in the world
80 percent of the world's population is presently not covered by social security at all.
If they fall ill they have to find a way to make ends meet themselves. Not so for this young pregnant lady in Tanzania, who is proudly holding up her new health insurance card. This will allow her to deliver her child safely with professional support. Along with almost half a million other women in Tanzania, she is benefiting from a programme to provide health insurance to poor pregnant women.
Pregnant and insured:
In Tanzania now available also for
poorer women, supported by Germany
"The fight against poverty is one of our overarching goals as a development bank. That is why we take the Sustainable Development Goals very seriously. In order to achieve them we have to consider all possibilities and instruments – and insurance is certainly one of them."Dr Norbert Kloppenburg, Member of KfW's Executive Board
Benefit: one dollar in preparedness
saves four dollars in recovery
KfW is exploring new approaches of insurance and is doing so in cooperation with other actors from the public and the private sector. On 2 and 3 November 2016 more than 150 experts from around the world attended the "Development Finance Forum" in Frankfurt, KfW Development Bank's most important specialist event. Held every year, it focuses on a current development cooperation issue. The key note speaker this time was Stefan Dercon, Professor at University of Oxford.
"Insurance is creating certainty in a world of uncertainty"
This year's event was called "Insuring the Sustainable Development Goals". It covered insurance and why it is becoming increasingly more important, particularly in times of climate change and major pandemics. The experts spent two days looking for ways to involve insurance to an even greater extent in development cooperation. Among them Dolika Banda, CEO of the African Risk Capacity Limited, who thinks insurance is an important risk management instrument. Because it is an innovative way of shifting the risk from post to ante crisis management. But it has to be communicated well.
"Insurance need a great level of trust which has to be built on all levels"
Further Information
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Author: Friederike Bauer
Editor: Alia Begisheva
Copyright Picture 1: plainpicture, Westend61, Photographer: David Santiago Garcia
