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The collaboration between the insurance industry and the development sector has grown significantly over the last five years. Key initiatives, such as the Insurance Development Forum, InsuResilience Global Partnership and the Ocean Risk and Resilience Action Alliance, have evolved into significant policy and standard setting partnerships, bringing together countries, the development sector, and the private and mutual/cooperative sectors of industry. Increasingly, these partnerships are moving beyond policy to programming, with a strong focus on not only delivering insurance and risk financing solutions to countries and communities, but also on long-term transformational change of insurance markets.
Such a transformation is needed for countries like Bangladesh given the increasing complexity of the
looming challenges, from the COVID-19 pandemic to risks associated with climate change and natural disasters, which could hinder the delivery of socio-economic services to the poor and vulnerable as well as the country’s progress towards the Sustainable Development Goals (SDGs). Embedding insurance and risk finance into broader risk management frameworks will contribute to resilience-building in Bangladesh, especially as it can allow the government to tap into additional resources and expertise from the private sector, particularly the insurance industry.
As part of UNDP’s growing work in the inclusive insurance and risk finance space, it has been conducting diagnostic exercises in a number of countries to understand the contexts, gaps and opportunities for collaboration and technical assistance. The scope of the diagnostic covers inclusive insurance, sovereign risk financing, insurance investments, natural capital, and can be tailored to a country’s development needs. The same exercise is now planned for implementation in Bangladesh to review the issues relevant to the inclusive insurance and risk finance landscape. The diagnostic will examine supply and demand issues, from the legislative and regulatory environment through to community needs. This exercise will also explore the potentials for synchronizing insurance with relevant national development agendas and frameworks (such as on disaster risk management, climate change, Integrated National Financing Framework). The resulting diagnostic report will not only highlight challenges and opportunities, but will also highlight those areas where UNDP can, together with partners, provide support to improve the enabling environment for inclusive insurance and risk financing, as well as work with partners to develop and deploy specific solutions relevant to the country context.
II. Rationale and Objectives
The general objectives of the country diagnostic include:
• To document and assess the landscape of inclusive insurance and risk finance in Bangladesh;
• To understand how best to integrate insurance/risk finance into development frameworks and
development financing;
• To open up opportunities for dialogues among key stakeholders in strengthening inclusive insurance
and risk finance for Bangladesh; and
• To lay the groundwork for designing insurance solutions that help address the country’s development challenges
Specifically, the diagnostic will explore:
• The underlying conditions for any work in insurance and risk finance, from financial inclusion through to underlying risks;
• The gaps in information, for example, data and information related to insurance, demographics and disaster events and their impacts;
• The needed enabling environment measures to develop more effective insurance and risk financing in the country;
• The status of insurance/risk finance and to what extent it is integrated into development frameworks and development financing, including what protection measures are in place for public assets in the event of a disaster;
• The capacity of government to manage data and analytics;
• The potential areas for exploration with partners to develop new insurance tools, products and
services;
• The levels of understanding, engagement and trust of insurance and risk finance; and
• The linkages between insurance and finance sectors, as well as linkages between government social programmes with commercial insurance.
III. Scope of diagnostic
The diagnostic will cover significant ground across the inter-related areas of insurance and risk finance. It will articulate the evolution of the supply side, develop a picture of the demand side, the gaps and opportunities in the environment (i.e. government attitude and support, existing government insurance schemes, current legal and regulatory environment including relevant public finance allocations, regulators’ capability and passion to develop the market, the financial status of insurance companies in the country, the attitude and approach of insurance companies to develop new opportunities and reach new markets, requirements for inclusive insurance product development, etc.) and complete a country profile that covers information relevant for inclusive insurance such as, providing demographic, socio-economic and sectoral contexts.
Structurally, the diagnostic will cover the following five areas:
1) Underlying Risk and Development Information:
a. Hazard Profile;
b. Crisis and Disaster History (including Geographical mapping);
c. Political Economy;
d. Development Dynamics;
e. Technology;
f. Data Mapping.
2) Market Conditions for Inclusive Insurance:
a. Overview of Current Market;
b. Legislation, Regulation, Institutional Capacity (the enabling environment);
c. Market Demand;
d. Supply, Providers.
3) Market Conditions for Risk Finance:
a. Existing Assessments of Disaster Risk;
b. Fiscal Impact;
c. Existing Legal and Institutional Framework;
d. Existing Disaster Risk Finance Mechanisms and Instruments;
e. Funding gap analysis;
f. Government preconditions for premium subsidies.
4) Insurance/Risk Finance and Development Integration:
a. In Development Frameworks
b. In Development Financing
5) Additional information for the Insurance and Risk Finance Team, specifically in the areas of Investment and Natural Capital.
Background for this assignment:
The United Nations Development Programme (UNDP) is a global organization with 17,000 staff working in approximately 170 offices towards supporting governments in developing strong policies, institutions, and partnerships to achieve the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. UNDP’s policy work carried out at HQ, Regional and Country Office levels forms a contiguous spectrum of deep local knowledge to cutting-edge global perspectives and advocacy. To streamline its financial and investment engagement, UNDP launched the Finance Sector Hub, a finance and innovation platform, that draws on a critical mass of UNDP expertise, initiatives, and partnerships to support the mobilization and leveraging of resources for the SDGs and lead the implementation of the new UNDP private sector strategy and other initiatives.
1. UNDP’s Work on Insurance and Risk Financing
The collaboration between the insurance industry and the development sector has grown significantly over the last five years. Key initiatives, such as the Insurance Development Forum, InsuResilience Global Partnership and the Ocean Risk and Resilience Action Alliance, have evolved into significant policy and standard setting partnerships, bringing together countries, the development sector, and the private and mutual/cooperative sectors of industry. Increasingly, these partnerships are moving beyond policy to programming, with a strong focus on not only delivering insurance and risk financing solutions to countries and communities, but also on long-term transformational change of insurance markets.
UNDP’s growing work in this space has led to the creation of a flagship initiative on insurance and risk finance, and the creation of a dedicated facility for supporting UNDP Country Offices and country partners worldwide, within the newly created Finance Sector Hub. This work covers a range of critical areas where insurance and risk transfer solutions and collaboration with the industry can add significantly to achieving and delivering on the Sustainable Development Goals (SDGs.) Covering inclusive insurance, sovereign risk financing, insurance investments, natural capital, health, SME development and more, UNDP will work towards developing and delivering insurance solutions together with countries and communities, as well as collaborating with partners to transform insurance markets through enhancing legislation, regulation and institutional capacity.
Diagnostic report for Inclusive Insurance and Risk Finance
As part of the increasing operationalization of the work of the Facility – in part through the start of the work of the Tripartite Agreement between UNDP, the Insurance Development Forum, and the German government – there is a need to prepare a full diagnostic review of all issues relevant to the Inclusive Insurance and Risk Finance environment in Bangladesh. This diagnostic will examine supply and demand issues, everything from the legislative and regulatory environment through to community needs, the potential for how insurance and other national development priorities and processes can be linked, for inclusive insurance and risk finance, through to insurance investments and natural capital.
2. Objective of the assignment
The main objective of the assignment is to coordinate the conduct of a country diagnostic on inclusive insurance and risk finance for Bangladesh for which a report is to be co-developed by two National Experts.