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Objectives: Insurance has been largely absent from the landscape finance agenda. Yet, as risk management specialists and major universal investors, the insurance sector has much to offer to and gain from resilient landscapes. To date, much of the focus on insurance in the landscapes and REDD+ context has been predominantly associated with covering the risks associated with forest and REDD+ projects themselves, such as political, commercial and market risks. Far less attention has been paid to the broader sustainability risks in emerging country contexts that affect landscape investments and the potential role of the insurance sector in driving better risk management practices.
This session drew on expertise from the insurance sector to build clarity on the challenges and opportunities for investors and insurers to manage downside risks of landscape investments and enable landscapes investments at scale. Specifically, the session aimed to unpack ‘landscape investments’ and discuss the range of risk solutions and insurance products that could be applied to develop improved risk reduction.
Key aspects addressed during the session included:
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Insurance markets in emerging countries face a number of barriers (such as lack of demand, low risk awareness, low understanding and requirements for insurance), leading to a lack of demand for sophisticated insurance products that could incentivize more sustainable practices.
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Private sector finance often perceives sustainability-driven ‘landscape investments’ in emerging country contexts as ‘too risky’.
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The insurance sector cannot eliminate risk, but instead, stakeholders must better understand how insurance products and offerings can be structured to improve risk reduction, transfer and risk sharing.
Background reading:
- Innovation Brief – Indonesian Palm oil: Aligning investment opportunities with Indonesia’s corporate commitments to sustainable palm oil (Earth Security Group, 2015)
- African Risk Capacity (ARC) Payouts to Exceed $25 Million (Insurance Journal, 2015)
- Conservation letter 5 (266-273): iREDD hedges against avoided deforestation’s unholy trinity of leakage, permanence and additionality (Conservation letter; 2012)
- Insuring climate resilience: How insurers are responding to climate change. And how they can be part of an effective government response (PSI, UNEP; 2013)
