The public-private partnership of insurers and global policymakers is working with BlackRock to put a new blueprint of scalable solutions for infrastructure projects into action.
The Insurance Development Forum (IDF) has announced plans to make it easier for insurers to invest in resilient infrastructure in emerging and developing economies that will help vulnerable communities better mitigate the impact of climate change and natural disasters.
Providing emerging and developing countries with improved access to hedging climate risks was a major talking point at last year’s COP28 climate conference.
“We believe we can provide a practical contribution towards bridging the funding gap in emerging markets’ infrastructure which is estimated at $1.3trn,” said Ekhosuehi Iyahen, secretary general of the IDF.
Blueprint
The IDF was founded at the COP21 climate summit in Paris in 2015, with the aim to reduce the impact of climate change and natural disasters in emerging markets. Its members include the UN and the World Bank, as well as insurance companies and brokers including Munich Re and Swiss Re. A 1% increase in insurance penetration may slash the disaster recovery burden on taxpayers by up to 22%, according to IDF research.
In the past year, the IDF has developed a blueprint that it hopes can serve as a catalyst for more impactful insurance sector investments in a range of greenfield and brownfield commercial infrastructure projects in sectors including renewable energy, water, waste, transportation, digital infrastructure, telecommunication and nature-based solutions.
“The blueprint was designed by insurers with our specific investment needs in mind,” said Michel Liès, chair of the IDF steering committee. “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.”
BlackRock
The IDF said it was working with BlackRock, the world’s biggest asset manager, to put its blueprint into action.
“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,” said Charles Hatami, global head of the financial and strategic investor group at BlackRock.
Hatami said he was looking forward to working with the IDF “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.”
Iyahen of the IDF said she was “convinced” that the blueprint constitutes “an efficient answer to some of the needs climate-vulnerable emerging and developing countries are facing”.
