New Innovation Challenge Fund to boost financial resilience of low-income populations in developing countries

By United Nations Development Programme

New Innovation Challenge Fund to boost financial resilience of low-income populations in developing countries

The United Nations Development Programme (UNDP) and the International Cooperative and Mutual Insurance Federation (ICMIF) Foundation launched the Insurance Innovation Challenge Fund. The Fund, initially funded with US$600,000, will enable mutual insurance initiatives to strengthen the financial resilience of people with low income. Mutual and cooperative insurers will have to compete for technical and financial resources to develop and distribute innovative and affordable insurance products specifically serving the needs of the most vulnerable households.

The COVID-19 pandemic has had a devastating impact on low-income communities in developing countries and millions were pushed back into poverty. For the first time since its inception over three decades ago, there has been a fall in UNDP’s Human Development Index for the past two consecutive years. The war in Ukraine and the looming climate crisis are exacerbating poverty and inequality hike.

“Expanding access to affordable insurance solutions specifically tailored to the needs of the poorest in developing countries is a priority to strengthen how they manage to cope through compounding crisis. When the worst happens, these communities are often the most affected and the least able to recover. Insurance is one of the key tools to avoid a downward spiral of debt and poverty,” noted Ulrika Modéer, UN Assistant Secretary-General and Director of UNDP’s Bureau of External Relations and Advocacy.

“ICMIF is excited about this new joint endeavor with UNDP to support the world’s poorest communities and build resilience in the face of climate, health, and other shocks. Mutual and cooperative insurers work with grassroots communities to co-create risk models and build education programs that support risk mitigation and adaptation. This partnership will help scale access to affordable insurance for the people who need it most, building on the ICMIF Foundation’s 5-5-5 Mutual Microinsurance Strategy which has reached 15 million people over the last five years” added Rob Wesseling, President, and CEO, Co-operators (Canada) and Chair of the ICMIF Foundation.

The Insurance Innovation Challenge Fund brings together the inclusive insurance expertise and closeness to vulnerable communities of the ICMIF Foundation, which is currently serving three million households living on average with less than US$5 per day, with UNDP’s long-term focus on building financial resilience of communities and countries. Overseen by UNDP’s Insurance and Risk Finance Facility and administered by the ICMIF Foundation, the Challenge Fund will support a minimum of four organizations over 2-3 years to scale their existing microinsurance programs to reach new customers and markets in developing countries, with plans to significantly scale up the work into the future.