The Foreign, Commonwealth and Development Office (FCDO), which is responsible for the UK’s global diplomacy, development and consular work, has committed an additional £3 million to the Technical Assistance Facility (NDF TA Facility) run by the Natural Disasters Fund (NDF), a hybrid risk transfer instrument designed to mitigate climate-related challenges and build resilience in low- and middle-income countries.
NDF has been successfully sponsored by the government since 2018. From 2020, NDF shares risk with private sector reinsurer Hannover Re. Now, however, MS Amlin has joined NDF as an additional provider of private sector risk capabilities.
This additional funding will allow NDF to support the development of another round of 10-15 high-impact risk transfer projects aimed at assisting climate-vulnerable communities and businesses until 2030.
The move reflects FCDO’s long-term commitment to enhancing climate resilience in the Southern Hemisphere and aims to engage more broadly in the climate and disaster risk finance and insurance (CDRFI) sector.
FCDO and German development bank KfW, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), are the founding public partners of the NDF in 2018 and 2020 respectively, with initial capital and risk tolerance of approximately US$70 million.
UK Development Secretary Baroness Champan said: “The recent payment of $662 million to Jamaica in response to Hurricane Melissa shows the value of pre-arranged funding for immediate response, reconstruction and long-term stability.
“That’s why the UK is working with multilateral development banks and the insurance industry to expand pre-arranged finance and strengthen disaster response. This will help develop insurance solutions that are suitable for people in climate-vulnerable countries – driving more confident investment, resilient financial systems and stronger, more stable growth.”
Angus Kirk, CEO of Global Parametrics, commented: “This additional funding from FCDO is a tribute to the NDF’s continued success. Climate and natural disaster risks disproportionately impact low- and middle-income countries.
“The severe lack of insurance coverage in these countries prevents them from recovering and building resilience to catastrophic climate events, and severely constrains their economic growth and prosperity. Public-private partnerships such as NDF, FCDO and KfW play a vital role in combining expertise and resources to help promote global knowledge sharing, innovation and long-term resilience building.”
