The UK government has joined forces with the Insurance Development Forum (IDF) to create a new Insurance Partnership for Development, aimed at helping emerging and developing economies prepare financially for disasters and other shocks.

The partnership, between the IDF and the Foreign, Commonwealth and Development Office (FCDO), was announced at the COP31 climate summit in Türkiye. It will launch formally in 2027, with the details, including funding, governance and the programme of work, to be set out during a first phase ahead of that launch.

The FCDO and the IDF will co-lead the work, bringing together insurers, reinsurers, governments, regulators and international financial institutions to tackle barriers that no single organisation can solve alone.

Three priorities for the partnership

The partnership will focus on three linked areas. The first is scaling up pre-arranged finance, so countries have money in place before disasters strike rather than relying on slow, debt-financed responses afterwards.

The second is using insurance to reduce the risk of investing in emerging and developing economies, in order to attract more private capital. The third is deepening domestic insurance markets, so lower-income countries can close their protection gaps and connect with global markets.

“The scale of the [climate] problem cannot be met by the public sector alone,” said Rachel Kyte, the UK’s special representative for climate.

Michel Liès, chairman of Zurich Insurance and chair of the IDF steering committee, noted that the UK government, through its former Department for International Development, helped establish the IDF. Patrick Tiernan, chief executive of Lloyd’s and a steering committee member, said the partnership was an opportunity to build resilience while developing sustainable commercial insurance markets.

Building on recent momentum

The agreement adds to a run of activity aimed at closing protection gaps in developing economies. The IDF recently appointed Hope Murera, chief executive of African reinsurer ZEP-RE, as deputy chair of its steering committee.

The Chartered Insurance Institute signed an agreement with Rwanda’s insurers last month to build professional standards, as Rwanda pursues a target of raising insurance penetration from 1.9 per cent to 5 per cent of gross domestic product by 2035.

Moody’s has also highlighted insurance’s role in climate finance. It said last month that insurance and guarantees made up 14 per cent of the concessional instruments used in climate blended finance deals between 2022 and 2024, while warning that credit enhancement cannot make unviable projects investable.

What it could mean for the London market

For London market insurers and reinsurers, the partnership could open new opportunities in sovereign disaster risk cover, parametric products and political risk insurance for infrastructure investment, areas where Lloyd’s and specialty markets already play a role.

For brokers working with development finance institutions, sovereign clients or businesses investing in emerging markets, it signals more public support for insurance-backed structures.

The partnership was launched as the UK used COP31 to set out a wider climate and development agenda, including a £200 million commitment over four years through the Private Infrastructure Development Group to help mobilise private capital for climate-resilient infrastructure in Africa and Asia.

Sources: Insurance Business and Law360