NITF presents National Natural Disaster insurance Scheme during COP 24 in Poland

Sri Lanka’s National Natural Disaster Insurance Scheme (NNDIS) was one of the main topics takenup at this year’s 2nd InsuResilience Global Partnership Forum, which took place in Katowice, Poland,during the UN Climate Conference (COP 24) this Month.

On 10 December the National Insurance Trust Fund (NITF) participated at this forum held on thetheme “Paving the way to effective risk financing solutions”. 

The Forum is the annual meeting ofthe InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions(IGP). The two co-chairs of the InsuResilience Global Partnership High-Level Consultative Group,namely Republic of the Marshall Islands Finance Minister Brenson Wase and Parliamentary State Secretary to the German Federal Minister for Economic Cooperation and Development (BMZ)DrMaria Flachsbarth, graced the occasion, which was well attended by over twohundred representatives of InsuResilience member institutions, including the European Union.

Approaches to promote climate and disaster risk finance and insurance solutions in Pakistan,Colombia, Sri Lanka, Zambia and West Africa were discussed in five different sessions, and in the SriLanka session Barbara Schnell (KfW Sector Policy Director) invited representatives of the NationalInsurance Trust Fund of Sri Lanka and representatives of the Insurance sector to discuss innovativesolutions to better protect the most vulnerable segment of the population of Sri Lanka against theconsequences of climate change through the national insurance scheme.It is now globally recognised that Sri Lanka is one of the five countries most heavily affected bynatural disasters. In 2016, the Government of Sri Lanka established the National Natural DisasterInsurance Scheme (NNDIS) to protect its uninsured population against natural disasters.Since its inception the NNDIS has faced major sustainability challenges. 

At the Sri Lanka session, NITF CEO Sanath De Silva explained in detail the major challenges the NITF faces since the implementation of the NNDIS in 2016 and expressed the wish to improve the scheme. The NNDIS was established to provide relief to the uninsured public affected by natural disasters without being a burden to the General Treasury, offering cover for damages to houses, business premises of micro and small enterprises (with an annual turnover of less than Rs. 10 million), loss of lives and emergency relief expenses to take care of the displaced persons attributable to all types of natural catastrophes.

During the two years ending 31 March 2018, claims exceeding Rs. 5.5 billion have been paid byNITF under this scheme, with the Treasury paying insurance premiums of Rs. 800 million to NITF for this period. 

While the Government and the uninsured public have greatly benefitted by this scheme, it has exerted pressure on the NITF due to the mismatch between the premium paid by the Government and the cost of reinsurance cover needed to protect its balance sheet.

Global Business Counselling CEO Chandri Gunawardhana, who is also an advisor to NITF engaged by KfW,presented the vulnerabilities of Sri Lanka to natural disasters and the overall measures in place tomeet such challenges.

Munich Re’s Public Sector Business Development (PSBD) Initiatives Head and Insurance Development Forum (IDF) Pilot Programs Working Group ChairMichael Roth, reacting to the presented case and its challenges, proposed the Public Private Partnership solution approach of the working group for the Sri Lanka pilot and recourse to the expertise of the private sector.

After the Sri Lanka session, NITF CEO de Silvasaid:”It was a great opportunity for NITFand Sri Lanka to showcase the National Natural Disaster Insurance Scheme (NNDIS)as a pioneering initiative to use an insurance-based disaster risk financing solution at the country level at a globalforum of this level of importance. It is the first ever model in the world where the Governmenthas obtained an insurance blanket cover against natural disasters to protect uninsured houses andsmall businesses in the entire country.”

NITF Chairman Manjula de Silvaadded: “The continuity of NNDIS is of critical importance to the disaster prone public and the Government of Sri Lanka which is called upon to support the uninsured public, typically the most affected by natural disasters which are increasingly more frequent and intense. 

NITF greatly appreciates the role played by KfW as implementer of the InsuResilience Solutions Fund (ISF) and the Insurance Development Forum (IDF) for not only providing this opportunity to NITF but also for offering to extend their continued support to strengthen NNDIS to become a more sustainable and resilient program,” he added.

Launched at the 2017 UN Climate Conference in Bonn (COP23),the InsuResilience GlobalPartnership aims to strengthen the resilience of developing countries and to protect the lives andlivelihoods of poor and vulnerable people against the impacts of disasters. The central objective ofthe Partnership is to enable timely and reliable post-disaster response and to better prepare forclimate and disaster risks. Through the use of climate and disaster risk finance and insurancesolutions the Partnership aims to reduce humanitarian impacts, help poor and vulnerable peoplerecover faster, increase local adaptive capacity and strengthen local resilience. This complementsongoing efforts in countries to avert, minimise and address climate and disaster risks, and themulti-stakeholder initiative brings together representatives from governments, civil society,international organisations, private sector, and the academic world. KfW’s InsuResilience SolutionsFund (ISF) finances the development of innovative and sustainable climate risk insurance productsin developing countries and emerging economies contributing to the overall goal of the IGP. TheISF is implemented by KfW on behalf of the German Federal Ministry for Economic Cooperationand Development (BMZ).