Swiss Re announced the launch of its “Climate Adaptation Development Program” (CADP) at the Clinton Global Initiative 2007 meeting, which took place in New York on Sept.26-28.
The Program is “designed to develop a financial risk transfer market for the effects of adverse weather in emerging countries,” said the bulletin. “In a first phase, it will aim at providing financial protection against drought conditions for up to 400 000 people in Africa.”
Swiss Re has been a pioneer in developing markets for weather risk transfer instruments in low-income markets. Its first was in India in 2004. The reinsurer said that “a total of 280,000 policies have since been sold to small holder farmers.”
Swiss Re’s role will be in partnership with Millennium Promise, which it described as “a non-profit organization which aims to lift rural African villages out of the poverty trap.” A second partner is the International Research Institute for Climate and Society, part of The Earth Institute at Columbia University, which has pioneered climate modeling and climate risk management approaches. Their goal is to “develop and implement climate risk indices for all 12 clusters of Millennium Villages in Africa (Ethiopia, Ghana, Kenya, Malawi, Mali, Nigeria, Rwanda, Senegal, Tanzania and Uganda) which are home to 400,000 people,” said the bulletin.
Swiss Re will be responsible for assessing the climate risk indices, designing financial risk transfer instruments, and bringing them to the commercial financial market. It’s also agreed to “financially support related research and risk assessment, and will engage in complementary corporate citizenship initiatives.”
Swiss Re added that the “Climate Adaptation Development Program is open for partnerships. Additional contributions to research, training or funding of risk transfer from public and private institutions are invited.”
Ivo Menzinger, Head of Sustainability & Emerging Risk Management, commented: “Climate change is a fact and some of its consequences have become inevitable. Parallel to efforts that aim at reducing emissions we have to improve resilience against changing weather conditions, particularly in emerging markets. Our Climate Adaptation Development Program will contribute to develop a risk transfer market that will ultimately help small holder farmers buy agricultural inputs, overcome a lack of collateral, draw upon agricultural extension services and accumulate income.”
Swiss Re has been in the forefront for the development of initiatives designed to deal with the problems posed by the world’s changing climate. The reinsurer noted that it “identified climate change as an emerging risk some 20 years ago, and the concern has since evolved into an important component of the company’s long-term risk management strategy.
“In 2003, to demonstrate its commitment to reducing emissions, Swiss Re became the first major financial services company to launch a voluntary program to become greenhouse gas-neutral.”
Source: Swiss Re – www.swissre.com