Project will create insurance for Brazilian cities hit by climate disasters
Agreement between representative of Brazilian insurance companies and sustainable development association will allow exchange of information
An insurance program that will be made available to Brazilian municipalities to support in the event of climate disasters is what should result from a cooperation agreement signed between the National Confederation of Insurance Companies (CNseg) and ICLEI, a global association of local and subnational governments dedicated to sustainable development.
The partnership was signed this Sunday (3), during the 28th Climate Conference, COP 28, in Dubai, United Arab Emirates.
The agreement to promote and carry out the project “Insurance Mechanism for Urban Infrastructures” – Urban Infrastructure Insurance Facility (UIIF) will allow the exchange of expertise between the two entities to develop insurance for urban infrastructure in relation to climate change. The project, subsidized by the German Development Bank (KfW), will initially be implemented in the Brazilian cities of Belo Horizonte (MG), Recife (PE) and Salvador (BA).
According to Dyogo Oliveira, president of CNseg, the idea is to offer a product that municipalities can hire and, as a result, be better prepared to deal with climate-related incidents. “The objective is to form a group of cities to identify risks, infrastructure and develop a product design, with coverage, forms of contracting and the characteristics of the policy [contract], and, along with this, attract companies to participate ”, says Oliveira.
For Rodrigo de Oliveira Perpétuo, executive secretary of ICLEI, the partnership signed between the institutions strengthens municipal public management and serves the population that most needs the resource, contributing to a more efficient disaster prevention system in Brazil. “What we are designing is infrastructure insurance for cities, with resilience criteria, and the logic is to develop this market for insurance purchases by municipalities and a product adherent to insurers that meets the needs of municipalities”, explains Perpétuo.
The objective of the project is to facilitate decision-making in disaster risk management in locations affected by a meteorological incident, in addition to strengthening the financial resilience of cities to disasters.
The proposal is to present tailored insurance products for each of the three cities with a focus on:
Quick and easy reconstruction of critical infrastructure services;
Financial and technical assistance provided to affected families.
According to Oliveira, “the insurance that will be developed throughout the project seeks a way to guarantee quick payments to municipalities in the event of extreme weather events”.
“The idea is that Brazilian cities and other countries have a common typology to allow a viable scale for these facilities”, adds Perpétuo, from ICLEI.
The insurance market’s concern about the impacts of climate change is justified by the numbers. The estimate is for an increase of between 5% and 7% in insured losses over the last three decades due to natural disasters and around US$275 billion in global economic losses resulting from natural disasters covered by insurance in 2022.
The topic dominated the two days of debates at the largest insurance conference in Latin America, a meeting held in September in Rio de Janeiro, which brought together around 2,000 people from 41 countries, including global business leaders, executives, opinion makers and authorities.
At the time, CNseg (National Confederation of Insurers) itself announced the presentation of a bill to create a type of social insurance to assist victims of natural disasters in the country. The text, still under discussion, could also function as a substitute for PL 1,410, already being processed in the Chamber of Deputies.