Stimulating resilient recovery

While Insurance payouts from index products can bridge the financial liquidity gap until other assistance can be obtained (respond programmes), indemnity products can provide funding for including the BBB concept for more resilient reconstruction.

EXAMPLE: Integrated approaches such as the pan-national insurance pool ARC support government efforts to quickly and effectively implement resilient recovery activities. For instance, the contingency plans define delivery mechanisms to the affected poor and vulnerable population, integrated DRM and a monitoring system. These plans are linked to resilient recovery mechanisms, which can facilitate longer-term investments in increasing food security, DRR and climate resilience.

BBB may result in reduced premiums

Insured public buildings and critical infrastructure, when reconstructed according to BBB criteria, could lead to reduced premiums for indemnity insurance products. This, in turn, benefits not only the government but also people living in disaster-prone areas as basic services would not be disrupted for long.

Shorter business interruptions due to insured infrastructure − indirect impact

People along the agricultural value chain can indirectly benefit from government insurance as public infrastructure could be reconstructed faster and better (BBB), resulting in shorter business interruptions for, for example, agricultural traders and the transport sector.

Unlocking opportunities stimulated by insurance

In the ‘Recovery’ phase, governments and individual policyholders could realize that insurance can help lessen the financial repercussions of volatility and create a space for investments and planning at the macro level. Through this channel, insurance can help to ‘unlock opportunities’. At the micro level, insurance contributes to increased savings, could improve creditworthiness, boost economic growth and increase investments in higher-return activities (if complemented by other factors).

EXAMPLE: Public or semi-public insurance providers can play an important role, such as the government-owned insurer Philippine Crop Insurance Corporation that operates with a market-based and a social mandate to provide weather-related insurance cover for various agricultural producers, including subsistence farmers and agricultural SMEs.