The US Agency for International Development (USAID) is set to fund global broker WTW’s climate-resilient insurance solution, which is designed to foster climate adaptation investment from the private sector.
The pilot facility, funded by USAID, will allow the US Development Finance Corporation (DFC) to provide a parametric insurance product known as the Resilience Wrapper.
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This product aims to safeguard direct loans given to private enterprises against climate-related disruptions.
In the event of a climate shock such as a cyclone, flood or drought, the insurance will cover the loan repayments, thus maintaining the operational capacity of the borrowers and preventing defaults.
USAID chief climate officer Gillian Caldwell commented on the significance of the initiative, saying: “Innovations like the WTW Resilience Wrapper make communities better equipped to withstand disaster by supporting the local companies they depend on, while incentivising lenders to work in places they might otherwise consider too risky for investment. I commend WTW’s leadership in this area as it signals both the need and the opportunity for greater private investment in resilience.”
The funding, which is part of US President Joe Biden’s Emergency Plan for Adaptation and Resilience (PREPARE), was granted through the Adaptation Finance Window initiative of the USAID Climate Finance for Development Accelerator.
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By GlobalDataThis initiative focuses on using catalytic grant funding to reduce the risks associated with developing and expanding private sector-led climate adaptation strategies in frontier and emerging markets. It also includes contributions from the USAID Enterprises for Development, Growth and Empowerment (EDGE) Fund.
WTW senior director for Disaster Risk Finance & Parametrics Simon Young stated: “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.”
WTW was recently also in the news for its introduction of an excess casualty construction facility, focused on the North American market.
Last month, WTW launched a primary cyber and tech errors and omissions offering to help international clients with revenues up to $1bn headquartered outside of the UK and the US.
