Investing in Climate Change Insurance at the Frontier

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    Stockholm (NordSIP) – As the news of the war in Ukraine has taken over news feeds across the world it is easy to be lose the whole forest for these very important trees. However, despite the evolving human drama on Europe’s doorstep, the threat of climate change has not vanished. With increasing evidence of its damaging effects, and with structural readjustments at hand in Europe’s energy market, climate change is perhaps more relevant then ever.

    Developing countries are particularly exposed to these risks and will need to improve their resilience against the negative impacts, losses and damages of increasingly regular extreme weather events. Displaying some foresight, G7 leaders launched the InsuResilience Global Partnership at the 2017 UN Climate Conference COP23 in Bonn 2017 to help. The Partnership seeks to help developing countries become more resilient to the consequences of climate change and to protect the livelihoods of poor and vulnerable people against extreme weather events and natural disasters. The Partnership’s objective is to enable more timely and reliable post-disaster response and offer insurance solutions to reduce impacts and help poor and vulnerable people recover more quickly.

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    In this spirit, Germany’s development bank KfW set up the InsuResilience Investment Fund (IIF), to contribute to the adaptation to climate change by improving access to and the use of insurance in developing countries. The fund seeks to reduce the vulnerability of micro, small and medium enterprises (MSME) as well as low-income households to extreme weather events.

    IIF’s manager, BlueOrchard Finance Ltd (BlueOrchard), an impact investment manager, announced it had recently acquired a stake in Vanguard Assurance Limited (Vanguard Assurance), a general and micro-insurance group operating in Ghana. The investment vehicle is classified as an article 9 fund under the EU sustainable finance disclosures regulation (SFDR).

    Vanguard was founded as the first private indigenous insurance company in Ghana and has become a household name. The business has a strong presence in the commercial, SME and retail sectors and its branch network extends across the country. The company has digital distribution capabilities allowing it to reach low-income and rural customers beyond its branch network, with the potential to reach more than 500,000 individual policyholders by 2026. Ghana’s low-income population is particularly vulnerable to floods and droughts as a result of climate change. Appropriate insurance products are an important tool in improving the resilience of communities.

    “We are deeply aligned with Vanguard’s customer-centric values and have been impressed with the team’s commitment to innovation. Digitalisation represents a significant opportunity for the industry, and we are excited to be partnering with Vanguard as they continue to develop pioneering products and services for the Ghanaian market,” said Richard Hardy, Investment Director Africa at BlueOrchard.

    IIF has acquired 40% of the company and will appoint directors to the Vanguard board to assist the company in driving its market expansion, rolling out its micro-insurance distribution capabilities, and further enhancing governance. Through its Technical Assistance Facility, IIF will support Vanguard in developing new products and raising market awareness for climate risk mitigation.

    “We are excited to partner with BlueOrchard to deliver on our mission of developing innovative insurance offerings for multiple segments of the market and are confident that BlueOrchard’s experience and knowledge of the financial services sector, globally, will further strengthen our business and drive significant growth,” said Daniel Awuah-Darko, Chairman of Vanguard.


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