Pacific Small Island Developing States (PSIDS) are no strangers to the impact of climate change. Their livelihoods are hit the hardest as rising temperatures, unpredictable rainfall patterns, and frequent cyclonic storms threaten coastlines and destroy agriculture, small businesses, and fisheries. The latest climate outlook shows that around 12 cyclonic storms are anticipated for the South-West Pacific in the period between November 2021 and April 2022.

For a region that has witnessed extreme weather events, year after year, a new innovative weather risk insurance solution offers hope and adds the much anticipated strength to an otherwise limited disaster risk financing arsenal
To strengthen the financial resilience of Pacific Islanders, the UN Capital Development Fund led the Pacific Insurance and Climate Adaptation Programme (PICAP) which recently introduced the region’s first weather index based parametric microinsurance in Fiji, providing cover against cyclonic events.

The overall programme objective is to improve the financial preparedness of Pacific households, communities, small businesses and Governments towards climate change and natural hazards. This is achieved through a combination of stakeholder engagement, co-creation of solutions, raising awareness and capacity building, innovative financing options and digital linkages guided by the 2030 Sustainable Development Goals.

By design, the Programme’s objectives is to be delivered through a strategy implemented across four thematic areas-:Enabling Policy and Regulations, Digital Ecosystems, Inclusive Innovation and Empowered Customers. Those are also directly aligned to the core objectives of COP 26 : Adaptation, Collaboration and Mobilization. From October 31st this year, world leaders will meet in Glasgow to set new targets for cutting emissions from sources that are heating the planet. Many advocates for action against climate change including the UN Secretary General have called for “decisive and bold actions” and indicated that the Glasgow summit could be the one last chance and opportunity to “saving the planet”. The global UN summit is being held at an opportune time as countries have begun to recover and rebuild their economies post COVID-19, with both eyes on the existential climate threat. World leaders will reveal their climate targets which will be evaluated collectively as countries aim towards global, social, economic, and sustainable recovery six years after the Paris Agreement was adopted.

In line with COP26’s goal on adaptation, PICAP was integrated into the Pacific’s climate finance infrastructure to boost community adaptation, minimize losses, accelerate economic recovery, build resilience,
and protect livelihoods.

In terms of collaboration and mobilisation, the Programme adopted a market systems development approach that sought to strengthen relationships and collaboration between existing market actors for greater reach and impact.
Through its partnerships with the private and public sectors, national and international governments, and the civil society, PICAP has introduced innovative climate and disaster risk insurance solutions, delivered through digital payment platforms to ensure last mile reach. . This has allowed the Programme to make parametric insurance accessible, affordable, and gender inclusive.

By unlocking and mobilising public and private funds, the Programme ensured that direct and immediate financial relief was offered to those impacted by extreme weather events by engaging the private sector to deliver the solutions. . Through its partners, the Programme was able to form a natural coalition to raise awareness, accessibility, and capacity building to protect the vulnerable communities in the Pacific.

This Climate and Disaster Risk Financing and Insurance solution is only the beginning when it comes to protecting local communities, and future generations (including youths and women) from the consequences of climate change. The current pilot phase plays a pivotal role in Fiji, and is now considered a silver lining in the battle against climate change and natural disasters in the Pacific.

It is by active collaboration, capital mobilisation, and commitment towards COP26’s goals, can we begin to alleviate the impact of climate change on vulnerable communities. PICAP is committed to building back better and stronger by taking this CDRFI milestone into other Pacific island countries and reiterating its commitment towards the Sustainable Development Goals on Climate Action, Gender Equity, and Partnerships.