The Insurance Development Forum (IDF) has revealed its initiative to stimulate investment from the insurance sector into resilient infrastructure projects, with a particular focus on emerging and developing economies.
In collaboration with BlackRock, a global asset manager, the IDF aims to bolster the resilience of vulnerable communities against climate change and natural disasters through strategic investments.
Over the past year, the IDF Infrastructure Task Force has meticulously crafted a blueprint designed to spur mobilisation and impactful investment within an overlooked sector of infrastructure. This blueprint, formulated by prominent IDF insurance company members, aligns closely with the IDF’s mission to harness insurance and risk management capabilities for enhancing resilience to climate-related risks and disasters.
The initiative targets the mobilisation of insurance industry capital into smaller to mid-size commercial infrastructure ventures in developing markets. These projects encompass a diverse range of sectors such as renewable energy, water management, transportation, digital infrastructure, and social amenities like hospitals and educational facilities. Additionally, nature-based solutions geared towards fortifying vulnerable communities against climate-related perils are prioritised.
Investments will primarily take the form of senior and mezzanine secured debt, meeting the stringent credit requirements of the insurance industry. To bolster credit quality and facilitate investment, the IDF intends to collaborate with Development Finance Institutions (DFIs) and other credit enhancement providers to devise innovative financial structures.
The IDF’s overarching goal is to deliver replicable and scalable solutions for resilient infrastructure projects, ensuring swift market penetration and tangible benefits for vulnerable communities. Leveraging the robust risk analytical capabilities of the insurance sector, the blueprint emphasizes the assessment of investment resilience and community impact.
Michel Liès, chair of the IDF Steering Committee, said: “The Insurance Development Forum is today issuing an unprecedented call to action to the global re/insurance sector to support the investment in resilient and sustainable infrastructure in vulnerable communities. COP28 highlighted the urgent need to scale up the financing for resilient infrastructure. The blueprint was designed by insurers with our specific investment needs in mind. We see this as essential for companies’ and countries’ long-term sustainability, and the effective mobilisation of insurance industry capital towards a much-underserved segment of the infrastructure market in emerging and developing countries.
He continued: “We are delighted with the support that our blueprint has already attracted from the core IDF industry membership and that we are able to count on the significant expertise of BlackRock to deliver the meaningful impact we want to have on individuals, communities and businesses in countries which are particularly vulnerable to the impacts of climate change and other disasters.”
Philipp Hildebrand, Vice Chairman of BlackRock, also commented, saying: “BlackRock is delighted to partner with a group of our most strategic insurance investors to help advance their objective of building greater resilience against climate change and other natural disasters in emerging markets.”
Charles Hatami, Global Head of the Financial and Strategic Investor Group at BlackRock, added: “With developing nations facing a significant shortfall in the capital they need to build resiliency and to support a low-carbon transition in their economies, we see innovative solutions, such as public-private partnerships and blended finance structures, as important tools for mobilising greater private capital into these markets. We look forward to jointly exploring with the IDF ways to evolve the investment universe for blended finance beyond equities and into debt, in a way that meets the specific needs of insurers and delivers attractive risk-adjusted returns along with positive measurable outcomes.”
Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, concluded: “The IDF is proud to be at the vanguard of this important work, demonstrating in material terms the value of the insurance sector to the wider global community. We believe we can provide a practical contribution towards bridging the funding gap in emerging markets’ infrastructure which is estimated at USD 1.3 trillion.
“I am convinced that our blueprint will constitute an efficient answer to some of the needs climate-vulnerable emerging and developing countries are facing. It will also show the concrete commitment of a number of financial institutions to resilient infrastructure and further strengthen the IDF’s track record of delivering results that can inform longer term structural shifts in global resilience.”
