Page 18 - IB October 2021

Cover

Care currently offers. ClimateCare is a unique insurance solu-
tion, where all insured members who fall within the defined THE COST OF DISASTERS
geographical parameters of the extreme weather event like
cyclone will qualify for a claim pay-out based on pre-defined FJD$207 million
trigger events.” Total damage to crops due to TC
“This is a game-changer in many respects, given the target Winston (2016)
group – small holder farmers, fishers and market vendors - and
the attractive premium and terms,” Australian High Commis-
sioner John Feakes said at the virtual launch. FJD$10 million
FijiCare was selected to participate in the pilot through a
rigorous application process to choose partners who could Fiji government support to the sugarcane
sector to help farmers recover and pay off
take the insurance product to market, who could use digi- loans taken from the Sugar Cane Growers
tal platforms and mobile apps to connect to policy holders, Fund after TC Winston
and who could improve awareness and financial literacy. Sun
Insurance and Tower Insurance also met the criteria and will
become involved during the course of the pilot. FJD$350K
The product was developed following extensive consulta- The loss Fiji Rice reported in Fiji’s
tions with “the end beneficiaries like farmers like fishers and Northern Division due to TC Yasa in 2020
market vendor women etc,” said Narasimhan. “So it’s not and TC Ana in 2021
that we have sat in boardrooms and developed the product
and gone and dumped it in the market. It’s the other way 1500+
around. We have gone to the field sat with the beneficiaries,
smallholder farmers, fishers, market vendors, taxi drivers, Fijian businesses affected by TC Yasa at
and we talk to them about what their risk profile is, what are a cost of US$12million. Just 1% of them
they exposed to and what is their present coping mechanism, were insured.
and what can they ideally afford as premium. What is their
immediate requirement after a disaster. So all this led to the 15% 2%
product development.” Just 2% have an existing climate-
This first product offers coverage of up to FJD$1000 for Of Fijians have some related insurance product.
a category 5 cyclone, and slightly less for category 3 and 4 form of insurance.
events.
Fiji granted a VAT exemption for all climate and disaster
risk micro-insurance products in its 2021-22 national budget,
effectively reducing the premium paid by households by 9%.
PICAP says the effect of this is significant. For example, TC
Winston would have triggered payouts of F$627 (with VAT Sources: Climate Disaster Risk Financing and Insurance Demand Study Reports: Farmers (UNCDF),
Financial Services Demand Side Survey Fiji 2020 (Reserve Bank of Fiji)
exemption) compared to F$573 (without VAT exemption) for
sugar cane farmers for the premium level of F$100. Rice farm-
ers would have received F$58 higher payouts due to the VAT Insurance payouts will also be made into digital mobile wal-
exemption. lets, and the pilot aims to expand to other sectors in future
Fiji is one of the first countries to introduce a VAT exemp- iterations, as early results are evaluated, and the systems
tion, and PICAP says it makes the insurance product more refined.
attractive to low income households, makes it easier for In Vanuatu, work has been slightly delayed by border clo-
cooperatives to pre-finance premiums on farmers’ behalf, and sures, however product development is underway based on a
makes it easier for the product to be scaled across different Vanuatu demand study, and discussions are ongoing with insur-
sectors and locations. ance companies and other aggregators. The plan is to have
The digital onboarding of members will also help the a minimum viable product for Vanuatu in the first quarter of
cooperatives and aggregators connecting their members to 2022.
ClimateCare to improve their digital processes, databases and A demand study has also commenced in Tonga, with the
communications. intention of launching a product there by quarter 3, 2022.
“Many of them have manual records manual database. This Once the pilots are run in Fiji and Vanuatu, PICAP hopes
is an opportunity to move into a digital database…they can to see parametric insurance rolled out in Solomon Islands,
link it with their payroll, they can do whatever they want, Samoa, Papua New Guinea and other Pacific Island states by
but it will be a distributed database, it will take care of all 2025.
functionalities that they will acquire, and this can be run from
a simple laptop or a desktop,” Narasimhan says. editor@islandsbusiness.com

18 Islands Business, October 2021