The parametric product also addresses a key UN objective in the region: to improve resilience against climate change and support disaster risk management in the Pacific.


Pacific Island communities will soon have access to a new, innovative tool in efforts to combat climate change.

The UN Capital Development Fund-led Pacific Insurance and Climate Adaptation Programme (PICAP) virtually launched a pilot of the region’s first climate risk parametric micro-insurance product this month.

Launched by the Fijian Attorney-General and Minister for Economy, Hon. Mr Aiyaz Sayed-Khaiyum, the product aims to provide immediate financial relief to vulnerable communities, including farmers, fishers and small businesses, following a Tropical Cyclone.

The other guests included New Zealand High Commissioner to Fiji, H.E. Mr Jonathan Curr; Australian High Commissioner H.E. Mr John Feakes; Indian High Commissioner H.E. Mr Karthigeyan Subramanyan; UNDP Pacific Office in Fiji Resident Representative Mr Levan Bouadze; and Reserve Bank of Fiji Governor Mr Ariff Ali.

The product offer covers for cyclones and floods, with both carrying a maximum coverage of FJ$1,000, which will be paid out within 14-21 days following a tropical cyclone.

The premium is set at $FJ100 per annum and exempt from the nine percent value added tax (VAT) in Fiji.

“That means, for less than FJ$2 a week, a Fijian household that is vulnerable to the devastation of future storms can forge themselves a shield of financial security,” Mr Sayed-Khaiyum said.

“They will not wait for their government to pay them after a storm strikes; assistance will be available to them very quickly.”

The UN Capital Development Fund-led Pacific Insurance and Climate Adaptation Programme virtual launch (Photo: UNDCDF)


The product will aim to initially cover 500 small holder farmers, fishers and market vendors, with more than 400 already registered.

It will then be scaled up to reach 1,000 people before the start of Fiji’s cyclone season in November, and will later be expanded to cover other sectors, as well as the rest of the region starting with Vanuatu.

Mr Feakes described the product as a “game-changer” for the target groups, who are usually the most vulnerable to climate shocks but the least-equipped to deal with them.

“This work is an impressive example of Pacific-led innovation, harnessing private sector finance for climate adaptation. Australia is a steadfast partner in supporting the Pacific to build climate and disaster resilience,” he said.

Mr Subramanyan said the product was an example of how Pacific island countries were building resilience against climate change in new and creative ways.

With funding from Australia, New Zealand and India, through the UN Office for South-South Cooperation (UNOSSC), and the Luxembourg Government’s Climate and Energy Fund, he also described PICAP as a project that “embodies the spirit of multilateralism.”

The launch comes as the latest UN Inter-Governmental Panel on Climate Change report warns of intensifying floods and rainfall in the coming decade due to a fast-changing global climate.

The need for climate and disaster risk insurance for climate-vulnerable communities in the Pacific was identified in two recent UNCDF reports, including:

The former found that tropical cyclones presented an “imminent and devastating hazard” to farmers and most had few financial options to cope.  

From the 320 farmers surveyed in Fiji, and 95 in Vanuatu, more than 70 percent relied on savings, bank loans or financial support from family and friends for disaster recovery.

Insurance certificate recipient from the Cane Farmer’s Co-operative Savings and Loans Association Limited during the launch on 25 August 2021 (Photo: UNCDF).
Another insurance certificate recipient from the Cane Farmer’s Co-operative Savings and Loans Association Limited (Photo: UNCDF).
Insurance certificate recipient from the Cane Farmer’s Co-operative Savings and Loans Association Limited (Photo: UNCDF).


A 2020 Reserve Bank of Fiji Financial Services Demand Side survey reinforced these findings, showing that only 15 percent of Fiji’s 900,000 people currently use insurance.

The parametric product not only fills an important gap in the market but is also market-based. This means that the product can be traded by private insurers in the competitive marketplace once fully tested in the pilot phase.

“The recent pilot rollout of parametric micro-insurance is both timely, and expected to respond to the aspirations and needs of the market, while addressing a significant and persistent development challenge,” Mr Curr said.

Another unique aspect is that the parametric product is free of VAT, further lowering its price and encouraging uptake.

First recommended by the V20-led Sustainable Insurance Facility, Fiji was one of the first in the world to announce such an exemption based on a specific submission by UNCDF.

Mr Curr added: “This reinforces Fiji’s recognised role as an innovator among SIDS (Small Island Developing States) in addressing climate change and adaptation issues.”

PICAP is jointly administered by UNCDF, UN Development Programme (UNDP) and UN University’s Institute for Environment and Human Security (UNU-EHS).

The parametric product also addresses a key UN objective in the region: to improve resilience against climate change and support disaster risk management in the Pacific.

“Addressing climate change is a UN strategic priority in the region, and we are integrating it into programming to promote resilient and sustainable development in the Pacific,” UNDP’s Mr Bouadze said.

Private insurers and cooperatives in Fiji have also signed on as partners to ensure wider coverage within underserved communities – also known as ‘last mile’ communities.

FijiCare and Sun Insurance are the two private insurers underwriting the product.

A grant agreement has been approved for the Consumer Council of Fiji to deliver financial training and insurance awareness programmes in local communities.

The full list of cooperative and aggregator partners include: the Fiji Sugarcane Growers Fund and Council, Fiji Rice Limited, Fiji Coconut Millers Limited, Tailevu Dairy Farmers Cooperative Association Limited and the Cane Farmer’s Cooperative Savings and Loans Association Limited.

The parametric product will be an additional resource to cushion the financial impact of climate disaster and help communities on the frontlines build back faster.

With a solid foundation in place, and strategic partnerships formed, the product is now ready to be tested in the market.

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