12.04.2021

Integrating the value of nature in the insurance sector

Mangroves

Mangroves are valuable in the areas of adaptation to and mitigation of damage from the impacts of climate change, as well as for biodiversity conservation and the local economy. Photo: Dorotheé Marquardt

The Philippines is one of the countries most exposed to climate change, but also a richly biodiverse country that could use the protection of its ecosystems more effectively as nature-based climate solutions.

Restoring mangroves and coral reefs has been found to be a more cost-effective way to invest in climate adaptation, with additional benefits for mitigation, biodiversity and local livelihoods. However, the value of these solutions has yet to be integrated into the private sector’s finance and investment models, including in the insurance and reinsurance sector.

The IKI project ‘Facilitating private sector engagement for the financing of ecosystem-based adaptation in support of the Climate Change Action Plan of the Philippines’, implemented by Earth Security Partnerships C.I.C., has launched a new programme ‘Catalysing insurance leadership for nature-based solutions in the Philippines’ to turn the ‘business case’ for these solutions into concrete outcomes and initiatives by the private sector in the Philippines.

Earth Security is engaging insurance and reinsurance companies in the Philippines with an innovative business case, it is mobilising leading private sector corporations and philanthropic foundations, and exploring the development of innovative private sector partnerships in collaboration with municipal mayors from some of the country’s most vulnerable municipalities.

“PIRA is excited to be part of Earth Security’s ground-breaking effort to connect insurance and nature-based solutions with a viable and sustainable business model”.

Mitch Rellosa, Executive Director, Philippines Insurance and Reinsurance Association (PIRA)

The programme seeks to mobilise insurance and reinsurance companies to integrate the value of nature into their risk models and the pricing of insurance underwriting, creating incentives across the economy to consider nature-based solutions for development.

A pilot of a ‘mangrove insurance product’ in selected municipalities in the Philippines will show how the insurance industry and local mayors can work together to realise the value of mangroves across adaptation, mitigation, biodiversity and local economies. Furthermore, the programme will develop a private finance mechanism that can provide local banks and companies in the Philippines with a direct way to use their sustainable finance portfolios to finance ecosystem-based adaptation in vulnerable municipalities.

Bridging private sector solutions for local recovery

Earth Security is working with local partners including the Asian Institute of Management (AIM), the Philippine Insurance and Reinsurance Association (PIRA) and other partners in the programme. With over 50 applications from local government units and private companies, the demand for capacity building and innovative financing partnerships is very high in a country that is seeking practical opportunities to build its resilience to climate change. 

As one of the countries in the region hit hardest by COVID-19, this timely programme highlights opportunities for nature-based investments in resilience to contribute to the green economic recovery of coastal communities.


Online seminar

An online seminar in February 2021 brought together insurance and reinsurance sector stakeholders from the Philippines, industry regulators, and international companies, to discuss the opportunities that Earth Security is proposing to work on.

Watch the seminar recording.

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