WTW has secured funding from the US Agency for International Development (USAID) to create an insurance product aimed at enhancing climate resilience, and intended to catalyze climate adaptation investments from the private sector into regions vulnerable to climate change.
The funding will enable WTW to establish a pilot program that allows the US Development Finance Corporation (DFC) to implement a parametric insurance offering, dubbed the Resilience Wrapper. The solution is designed to safeguard direct loans provided to private enterprises against climate-induced disruptions.
In the event of a climate-related disaster, such as a cyclone, flood, or drought, the insurance payout covers the loan repayments due, thereby protecting borrowers from defaulting on their debt obligations after a climate shock.
See LinkedIn post here.
The project also aligns with the President’s Emergency Plan for Adaptation and Resilience (PREPARE), receiving short-term catalytic funding through the Adaptation Finance Window initiative of the USAID Climate Finance for Development Accelerator.
Simon Young (pictured above), senior director of disaster risk finance & parametrics at WTW, highlighted the critical role the Resilience Wrapper could play.
“With USAID funding, the WTW parametric solution will be a game changer for building the financial resilience of communities to extreme weather events by helping to unlock much-needed private sector investment in critical adaptation projects in climate vulnerable countries,” Young said.
Gillian Caldwell, USAID chief climate officer, also commended the Resilience Wrapper for its potential to safeguard communities and businesses from the financial devastation of disasters.
“A disaster can bankrupt a business overnight,” Caldwell said. “I commend WTW’s leadership in this area as it signals both the need and the opportunity for greater private investment in resilience.”
Last month, the global broker partnered with The Nature Conservancy (TNC) for the acquisition of a new coral reef insurance policy in Hawaii.
What are your thoughts on this story? Please feel free to share your comments below.
