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.