CCRIP SPC — formerly Caribbean Catastrophe Risk Insurance Facility — has signed a memorandum of understanding (MOU) with its African and Pacific counterparts that aims to increase collaboration on advocacy, product development and capacity building given the vulnerabilities related to climate change faced by countries in those regions.

CCRIF signed the MOU on the sidelines of the 27th United Nations Conference of Parties on Climate Change in Sharm El-Sheikh, Egypt, with African Risk Capacity (ARC) Limited and Pacific Catastrophic Risk Insurance Company (PCRIC).

“The relevance and importance of the three global risk pools is clear, especially in the face of the increasing frequency and intensity of climate change-induced events. The MOU formalises and establishes a framework for enhanced cooperation and partnership among the three risk pools,” joint release from the consortium stated.

As it core objective, the MOU will focus on strengthening the reach and impact of the world’s risk pools.

“This is an opportunity to take risk pools to the next level so that these are not just seen as insurance or mechanisms for transferring risk, but also are viewed as tools to scale up disaster risk finance [DRF] in a very significant way to enable governments to provide higher levels of financial protection for their populations, including the most vulnerable,” CCRIF CEO Isaac Anthony said during the signing ceremony.

He added that the document will foster the sharing of best practices in parametric insurance models among the three risk pools while collaborating on the development of new and innovative DRF instruments.

“One of the exciting things CCRIF is looking forward to is facilitating access to other types of DRF instruments. It will be important, for example, for the various risk pools to work collaboratively in engaging Global Shield, for example, to ensure that the role of risk pools is recognised in that particular effort,” Anthony adds.

According to ARC Ltd CEO Lesley Ndlovu, the launch of Global Shield against Climate Risks at COP27 has been long awaited, and is one of the tangible achievements of the Egypt event that will “transform the DRF landscape”.

“The Global Shield is an essential element in helping risk pools scale up their efforts to make insurance more accessible, affordable and available to the people who need it the most in the face of increasing frequency and severity of natural disasters,” he continued, while reiterating that the MOU will strengthen collaboration among the global risk pools.

Through advocacy and capacity building the global risks pools will raise awareness about their roles as development insurance facilities supporting economic and social development their respective member countries.

With loss and damage continuing to rise and as developing countries struggle to fund insurance premiums, member countries recognise that insurance provided by risk pools is an important financial resilience tool offers reprieve from the impact of perils. It also helps them meet the rising cost of disasters fuelled by climate change, which is outside of their control.

However, there are barriers to scaling up DRF, PCRIC CEO Aholotu Palu explains.

“While risk pools play an important role in moving the management of disaster and climate shocks away from ad hoc humanitarian assistance and focus the DRM ecosystem on an ex-ante approach, there is still somewhat a lack of understanding of the role we play in helping countries protect their financial means to build resilience and shield themselves from loss and damage caused by climate change.

“Through the signing of this MOU, we elevate collectively the role we play in helping countries fight the impact of climate change.”