World unprepared for future systemic shocks warns IDF

The Secretary General of the Insurance Development Forum (IDF) has warned the world is still not prepared for the impact of systemic risks such as a global pandemic.

Speaking at the launch of the IDF’s 2020 Review, Ekhosuehi Iyahen (above) said while much has been done the world was still unprepared to the shock systems risks can deliver.

“After an undoubtedly challenging 2020 for global resilience, the IDF has achieved tangible and visible results and laid the foundations for a year of further action in 2021,” she said. “In particular, the start of the IDF Peruvian Public Schools project marks the first country execution under the Tripartite Agreement – this project is a key proof of concept and also sets the blueprint for securing other public assets, such as hospitals, bridges and roads, as well as insuring agricultural output in developing countries in the future.

“But much work remains. The wider world beyond the insurance sector is little further ahead in having the tools, access and capabilities necessary to understand current, let alone future climate and systemic risks. We will continue to pursue action and investments involving our core open access risk modelling agenda to deliver the scale and scope of capabilities urgently required to improve resilience for exposed communities and sectors.”

The IDF is a public/private partnership led by the insurance industry and with the UN, World Bank and other international organisations from the public sector.

However, Ms Iyahen warned the insurance industry could not be expected to shoulder the burden of future events and called on global governments to look at the role they will need to play to combat future challenges.

“2021 will also see the IDF work to broaden the insurance sector’s ambition and global scope in line with the needs of the COP26 Private Finance Strategy,” she explained. “There is a need for a public private partnership to close the protection gap.

“Without public sector commitment, government engagement and the appropriate governance at the national and multilateral level, the industry is not capable of providing the solutions that are needed. The IDF is committed to ensuring that the insurance industry plays its part in the transition to a more resilient and fairer world – and 2021 will see us continue to work with our partners to leverage the technologies, expertise and financial mechanisms available to the insurance industry to enable the world’s most disaster vulnerable governments, economies and populations to enhance risk understanding and build resilience.”

Her views were backed by Denis Duverne, IDF Steering Committee Chair and Chairman of the Board at Axa.

“The need to build greater resilience for vulnerable people against disasters and crises has never been more tangibly demonstrated than in 2020. The COVID-19 pandemic has exposed the weaknesses of current Disaster Risk Financing (DRF) systems with absolute clarity,” he said. “The IDF is uniquely positioned to be part of these vital conversations, bringing public and private sectors together to enhance the understanding of pandemic risk. With this said, the climate crisis has not dissipated in the face of the pandemic.

“It is clear that the parallels between the pandemic and the climate crisis are entirely relevant to the work of the IDF: the global nature of impact of both, the systemwide socio-economic damage caused by both, and most poignantly, the disproportionate impact of both crises on poorer, more vulnerable people.

“As we prepare for the 2021 United Nations Climate Change Conference (COP26) our message is clear: the transition to a more climate-resilient world must happen now. The IDF’s key focus remains on building resilience for climate-vulnerable nations and actors. Now more than ever, we are in the spotlight to drive real, systemic change.”

“The IDF is committed to ensuring that the insurance industry plays its part in the transition to a more resilient and fairer world – and 2021 will see us continue to work with our partners to leverage the technologies, expertise and financial mechanisms available to the insurance industry to enable the world’s most disaster vulnerable governments, economies and populations to enhance risk understanding and build resilience.”

Ekhosuehi Iyahen, Insurance Development Forum (IDF)

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