The UN Capital Development Fund (UNCDF) welcomes the announcement by the New Zealand Foreign Minister, Nanaia Mahuta, on $NZ12 million (US$7m) in additional funding for our flagship Pacific Insurance and Climate Adaptation Programme (PICAP).

This new financial commitment by New Zealand will significantly boost efforts to build climate resilience and financial preparedness in the Pacific; specifically, by supporting expansion of PICAP in Vanuatu and other Pacific countries starting from this year, namely Samoa, Solomon Islands, Timor-Leste, Kiribati, and Papua New Guinea.

Minister Mahuta said supporting Pacific resilience remained a top priority for Aotearoa New Zealand and expanding the PICAP scheme was a practical and effective way to reduce the vulnerability of communities to the effects of climate change.

As one of the most climate-vulnerable nations in the world, Vanuatu was among the first in the region where PICAP piloted a novel parametric micro-insurance product through private insurer, VanCare.

The 84 beneficiaries covered under PICAP’s pilot parametric insurance scheme in Vanuatu all received payments for both events totaling VT25.56 million (VT18.38m for Judy and 7.2VT for Kevin) directly to their bank accounts or mobile wallets.

“We acknowledge the ongoing support of the Government of New Zealand to UNCDF, specifically to the Pacific Insurance and Climate Adaptation Programme, for the expansion phase from 2023-2025 that will see more climate vulnerable countries in the Pacific being covered by market-based climate risk insurance solutions, building financial resilience,”

said Henri Dommel, UNCDF Director for Inclusive Digital Economies.

“UNCDF, using the Pacific learnings, is also embarking on a global expansion of the portfolio to cover LDCs and under-developed markets in Asia, Africa and the Caribbean.”

Parametric insurance is a self-help tool that provides coverage against tropical cyclones and is the first-of-its-kind in Pacific markets. Beneficiaries in Vanuatu can purchase two product variants offering payments of up to VT50,000 and VT100,000 respectively for an annual premium of 10%.

Payments are trigged based on the strength and location of a cyclone and claims are processed quickly through digital wallets as there is no need to verify physical losses for the funds to be released.

The goal of the product is to provide farmers, fishers, micro, small and medium enterprises (MSME) owners and other climate-vulnerable groups with timely access to funds to meet their immediate financial needs and cope better with the adverse impacts of extreme weather hazards.

PICAP is jointly administered by UNCDF, the UN Development Programme (UNDP) and UN University Institute for Environment and Human Security (UNU-EHS).

Minister Mahuta made the announcement on a visit to Vanuatu last week as the island nation recovers from Tropical Cyclones Judy and Kevin that hit within weeks of each other last month.