In a 2021 speech at the World Economic Forum in Davos, UN Secretary-General Antonio Guterres, issued a rallying cry to the private sector: “We need you more than ever to help us change course, end fragility, avert climate catastrophe and build the equitable and sustainable future we want and need”.
This reaffirmed the long-held view that governments and international organisations see the private sector as an important ally in global efforts to achieve the sustainable development goals (SDGs) to build a safer, healthier and more prosperous world.
Partnerships are a recurring theme throughout the SDG agenda, with wide acknowledgement that governments and international agencies cannot achieve sustained global development alone.
Given the scale of the task at hand, made increasingly challenging by the pandemic, the resources and expertise at the private sector’s disposal could be the difference between success and failure.
The UN Capital Development Fund (UNCDF) works hand-in-hand with the private sector in each of the countries it is present in, to unlock public and private resources for the socio-economic development of low-income households and small businesses.
A good example is the UNCDF’s flagship Pacific Insurance and Climate Adaptation Programme (PICAP), which has developed the Pacific region’s first climate and disaster risk parametric micro-insurance product that is now available in Fiji and is set to expand to other Pacific Small Island Developing States (PSIDS).
The program has strategically partnered with Fiji-based private insurers, FijiCare and Sun Insurance, as the primary underwriters of the market-based product.
There is also a significant private sector reinsurance angle through global partnerships.
Both the local private insurers have provided critical feedback during the design and development of the products and there is ongoing engagement.
“The support from UNCDF has been a game-changer. They have actually changed the insurance market in Fiji,” said Avikash Ram, manager underwriting Broker at Sun Insurance.
“When initially the idea was brought to table we were not so keen because, apart from parametric insurance, we have suffered huge losses due to cyclones on our general classes. But now we are fully onboard after productive dialogue with UNCDF.”
The product
PICAP is funded by the governments of New Zealand and Australia, and Luxembourg’s Climate and Energy Fund.
The Fiji component is additionally funded by the Indian Government through the India-UN Fund and the UN Office for South-South Cooperation.
The micro-insurance product offers a cover of up to $F1000 ($US500) for cyclonic storms, which are increasing in frequency and intensity, and becoming more destructive in the region, according to a 2021 World Metrological Organisation (WMO) report.
The report warns that the increasing number of cyclones could jeopardise sustainable development in the region.
In response, PICAP aims to help strengthen the financial preparedness and resilience of Pacific households in the face of such perils.
As underwriters, FijiCare and Sun Insurance will process the payout following a cyclone, for a VAT-exempted premium of $F100 ($US46) per annum.
FijiCare is the lead insurer for the product and will carry out the bulk of the administrative work during the rollout.
The FijiCare team also conducted the bulk of the analysis and feedback collection in the lead up to product launch.
“It’s a wonderful product, much needed in a market like Fiji, where climactic volatility is ever increasing,” says FijiCare managing director, Avi Raju.
Mr Raju adds that a key strength of the product is that it blends well with existing insurance packages that provide cover for funerals or personal accidents to broaden the level of protection.
Sun Insurance has also recognised the potential of including the parametric micro-insurance product as part of a group policy.
In a separate interview, Mr Ram said: “From a business perspective, we’ve actually been trying to put this into a bundled project to attract more grassroots people taking up not only parametric insurance, but also for their house, personal assets and so forth.”
The partnership with UNCDF has unlocked new opportunities for two of Fiji’s leading insurance companies, while promoting sustainable and inclusive economic empowerment.
COVID-19 has made it a necessity for businesses to go digital and the two companies are embracing this shift to serve their customers better.
Both FijiCare and Sun Insurance will be linked to the Digital iOnboard platform developed by Suva-based FinTech company, IT Galax Solutions, with grant support from UNCDF.
The platform will maintain a digital membership database of all current subscribers to the product.
Product subscribers will have the option to receive the payout directly into their bank or mobile money accounts.
Mr Raju said: “Digitisation will help us actually expand. For example, the size of the market who need the product is a constant, but the people who can purchase the product for them is now increased through digitisation.”
Early impressions
Despite the many positives, there have been questions about whether such a product can be sustained over the long-term, especially given the long intervals between cyclones.
FijiCare’s Mr Raju puts this down to the novelty and as yet untested nature of the product. He is, however, optimistic that with more awareness and education, the product could stand the test of time “because there is a definite need for it”.
“The beauty of this is that it’s an evolving program and as we get more data and more experience we may need to tweak things here and there, but I don’t doubt how sustainable this product would be,” Mr Raju said.
Another common question is whether there is scope to bump up the maximum payout, which would inevitably result in an increase of the premium.
Mr Ram of Sun Insurance believes that while the limited payout is a weakness of the product, it is a good place to start for a brand new concept.
“I believe this is very much what they (customers) needed. Although the payout figure is small at this stage, it’s something to restart their lives with after a disaster,” he said.
He has already noticed a change in people’s attitude towards insurance after the introduction of this product.
“We’ve seen a change in how people who were in the past against insurance are now more educated about how insurance works and its benefits,” he said.
Symbiotic relationship
The relationship between UNCDF and the two private insurers is in many ways a symbiotic one.
The private insurers have an insurance-informed clientele, specialist staff and local market experience.
They can continue to promote and sell the product once it hits the market, ensuring product sustainability and continuity.
UNCDF, on the other hand, has a vast network with grassroots organisations in the region which private companies can tap into to broaden their customer base, while accessing technical and financial resources.
This partnership demonstrates how the private sector and international organisations can pool resources and expertise for the common good.
- SHELDON CHANEL is the Communications Officer (Regional) for United Nations Development Programme. The views expressed in this article are not necessarily those of The Fiji Times.
