THE Asian Development Bank (ADB) said Wednesday that it is developing a climate-risk insurance project for micro-, small-, and medium-sized enterprises (MSMEs) in the Philippines.
The project aims to come up with a sustainable business case and model for climate disaster insurance by studying the risk management needs of local MSMEs.
“MSMEs remain underserved and, in some instances, unreached by insurance markets, leaving them highly vulnerable to climate and disaster shocks,” the bank said.
The “climate-smart” insurance project will be supported by the Asia-Pacific Climate Finance Fund, a multi-donor trust fund managed by the ADB. The German government will also help fund the program.
“Small enterprises frequently lack access to effective risk management tools, such as climate risk insurance, to protect against climate and disaster shocks,” German Federal Ministry of Economic Cooperation and Development Director General Jurgen Zattler said.
“Promoting insurance access and adoption among small enterprises provides financial protection that helps to safeguard development gains and avoid reliance on adverse and less effective coping mechanisms.”
The ADB said the project will also explore solutions to the gender-specific impacts of disasters on MSMEs.
The climate-smart insurance project is the first project under the Vulnerable Twenty Group’s (V20) sustainable insurance facility.
V20 is a group of Finance Ministers from economies that are vulnerable to climate change.
The ADB has also partnered with the Philippines and Indonesia to launch an energy transition mechanism that aims to fund the early retirement of coal-run power plants and replace them with renewable energy alternatives. — Jenina P. Ibanez