MICROCAPITAL BRIEF: Fiji, IFC Partnering on Access to Insurance Against Cyclones

The government of Fiji and the International Finance Corporation (IFC), a member of the World Bank Group, recently signed an agreement to provide payments to disadvantaged families affected by cyclones in Fiji. Registered households that are impacted by future cyclones will be eligible to receive cash payouts to their bank accounts or vouchers to purchase rebuilding supplies via local retailers. 

IFC’s Vice President for Asia and the Pacific, Nena Stoilikovic, said, “Fiji is highly susceptible to natural disasters, particularly cyclones, and we know that 94 percent of homes in the Pacific Island nation are currently uninsured against tropical cyclones.… There is clearly a case for a bigger insurance market in Fiji, and IFC sees this initiative as a significant first step in spurring new insurance products. We look forward to working with the government and the private sector on this important initiative.” 

In part, the agreement is a response to the estimated USD 900 million in damages caused by Cyclone Winston in 2016. Fiji experienced economic losses amounting to one third of its GDP, with the brunt of the loss experienced by households that were uninsured, active in agriculture or both. Details on the implementation of the new program have not been released.

This initiative is part of the Fiji Partnership, which works to “stimulate private sector investment, promote sustainable economic growth, and reduce poverty.” The Fiji Partnership is supported by the government of Australia, the World Bank’s Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) and the IFC-managed Global Index Insurance Facility (GIIF). The objective of GIIF is to “expand the use of index insurance as a risk management tool in agriculture, food security and disaster risk reduction”.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2019, IFC reports total assets of USD 94.3 billion. In the Asia-Pacific region, IFC has worked in the private sector to provide “innovative and accessible” insurance products to individuals affected by climate related disasters, especially farmers in the Philippines, Bangladesh and Sri Lanka.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2019, it has 189 member nations. The group encompasses: (1) IFC; (2) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2018, the World Bank Group committed funding totaling USD 66.9 billion to its partner countries.

By Anna Gravois, Research Associate 

Sources and Additional Resources 

IFC press release 
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/4B010468AD7C09CE852584960006EC71?OpenDocument

PCRAFI homepage
http://pcrafi.spc.int

World Bank Group homepage
https://www.worldbank.org

IFC homepage
https://www.ifc.org

GIIF homepage
https://www.indexinsuranceforum.org

Fiji partnership homepage
https://consultations.worldbank.org/consultation/fiji-country-partnership-framework-2020-2024

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