Generali, in partnership with the United Nations Development Programme (UNDP), has announced a strategic initiative aimed at bridging the $1.8 trillion protection gap—defined as the disparity between insured and uninsured losses—through the implementation of parametric insurance solutions. This innovative insurance model promises expedited payouts and accelerated recovery efforts following climate-related events.
The findings of their collaborative report, titled “Parametric Insurance to Build Financial Resilience,” underscore the ability of parametric insurance to assist governments, businesses, and communities in financially preparing for natural disasters, including droughts, tropical cyclones, and earthquakes.
Distinct from conventional insurance models, parametric insurance provides predetermined payouts based on verified triggers, such as specific rainfall amounts, rather than assessed damages. This model allows for swifter financial disbursements, enhancing the efficiency of responses to natural hazards.
The report stresses the necessity of cooperation among governments, financial institutions, and insurers to ensure that parametric insurance effectively reaches vulnerable populations and bolsters overall financial resilience.
Jan Kellett, UNDP’s Global and Corporate Lead on Insurance and Risk Finance, emphasized the critical role of supportive regulatory frameworks. Kellett remarked that the scalability of parametric solutions cannot be achieved by the insurance sector alone, necessitating supportive government policies.
Christian Kanu, CEO of Generali Global Corporate & Commercial (GC&C), highlighted the affordability of parametric insurance coverage, particularly for underinsured communities, and noted its potential to foster productivity by promoting sustainable investments.
The report includes case studies from nations such as Malawi, Mexico, and India, demonstrating the successful application of parametric insurance in tackling challenges like food insecurity due to drought, losses from earthquakes, and extreme heat waves.
The partnership between UNDP and Generali seeks to enhance financial protection through public-private collaboration, with an emphasis on making parametric insurance more accessible and effective in advancing sustainable development.
Related topics:
