Page 35 - IB June July 2024

Insurance

PARAMETRIC INSURANCE INDUSTRY

OFF TO A ROUGH START IN VANUATU

By Kite Pareti Bank, Asian Development Bank and other agencies is now
spearheading the Natural Disaster Risk Financing Policy, which
Two insurance companies have exited Vanuatu, impacting will provide a framework for better coordination in response
beneficiaries and the burgeoning parametric insurance and recovery during natural disasters, said Viro.
industry. “While the policy framework will benefit the line ministries
Noeline W. Viro of the Insurance Supervision Unit of the for effective coordination during a disaster event, the
Reserve Bank of Vanuatu, says that while Tower Insurance financial instruments such as [a] parametric cyclone product is
Vanuatu is exiting the market, Capital Insurance (PNG) group needed as an immediate response tool for rural communities
will take over its operations. whilst waiting for government assistance which sometimes
Viro says the decision is due to Tower Insurance’s “change can be a lengthy process to implement,” she added.
of business strategy in offering its products and services via its Meanwhile, Regional Technical Specialist of UNCDF’s Pacific
online portal rather than face-to-face”. Insurance and Climate Adaptation Programme, Praneel
The company has also suffered major losses during recent Pritesh, says the agency is facilitating discussions with
severe cyclone events such as Tropical Cyclone (TC) Harold in alternative insurance providers and explore ways to fill this
2020 and the twin cyclones Kevin and Judy in 2023. gap.
“Tower Insurance had initially planned to launch its “We are also looking at potential partnerships with local
parametric cyclone product in June 2023. However, [the and regional insurers to ensure that affected beneficiaries
company] withdrew its plans following the devastation of twin continue to have access to essential parametric insurance
TC Kevin/Judy in March 2023, which means the company has products. Our priority is to maintain the resilience and
to regroup its resources in meeting huge claims from these financial stability of these climate-vulnerable communities
mentioned cyclones,” Viro told Islands Business. despite the market changes,” he said.
She adds that QBE Insurance (Vanuatu) is also exiting
the market with Alpha Insurance (PNG) Ltd to take over its
business. “The company is also exiting other parts of the
Pacific market, with the exception of Fiji, being a major
player in the market,” she said.
These market changes have impacted ClimateCare,
Vanuatu’s first parametric microinsurance product launched
by Vancare Insurance in 2022, with the support of the Vanuatu
government and the United Nations Capital Development
Fund-led Pacific Insurance and Climate Adaptation Programme
(PICAP).
Viro noted that by February 2023, 138 individuals from
Shefa province in Port Vila and Tafea had signed up for the
product. “Following the devastation of twin cyclones Kevin/
Judy in March 2023, 74 individuals out of the 138 were
considered eligible to benefit from the scheme – with the
first batch of payment made within two weeks after the
cyclones. The testimonials from these beneficiaries indicated
positive impact from these payouts as available cash to be
used immediately after the twin cyclones. There was positive
indication as well to sign-up for the next phase of the scheme
from all provinces.
“It was unfortunate that Vancare Insurance, though its
head office FijiCare Insurance, later decided to pull the
product out of the market, citing non-viability of the product
continuation. While the demand for this product remains,
there is currently no supplier in the market to fill this gap,”
she added.
The Vanuatu government in partnership with the World

Islands Business,June/Juy 2024 35