Closing the protection gap
GOVERNMENTS ARE WAKING TO THE POWER OF INSURANCE TO BUILD RESILIENCE
initiative, which aims to deliver climate risk insurance to 400 million of the world’s most vulnerable people by 2020.This global partnership has since been expanded to and adopted by the G20 and to the “V20” (a group of 49 nations considered most vulnerable to climate change). In 2016, the insurance industry, with the support of leaders from the World Bank and the United Nations, formed the Insurance Development Forum (IDF), in which Clyde & Co is involved. The IDF aims to extend the use of insurance and risk management techniques to build greater global resilience. At the G20 meeting in July 2017, the UK announced the establishment of the London Centre for Global Disaster Protection, in combination with the World Bank, to help developing countries plan for disasters and assess what insurance they might need as part of a risk mitigation strategy. The IDF and the London Centre will provide key platforms for knowledge- sharing and capacity-building to help facilitate the deployment of insurance to contribute to global resilience.
There is a growing international consen- sus that increased insurance penetration can improve global resilience. Insurance continues to play a unique and vital role in society, as it has done since its foundation, allowing individuals, businesses and com- munities to rebuild after disaster strikes. A Lloyd’s study in 2012 showed that, in a sample of five large developed and developing economies, a one percent increase in insurance penetration would lead to a reduction in the disaster burden on taxpayers of 22%. 5 In short, closing the protection gap through appropriately designed insurance solutions can help mitigate the effects of natural catastrophes by enabling communities to get back on their feet quicker and more efficiently. In the last several years there have been a number of positive initiatives that seek to bridge the global protection gap. In 2015, the G7 launched its InsuResilience
5 https://www.lloyds.com/news-and-insight/risk-insight/library/understanding-risk/global-underinsurance-report
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