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Design and implement Public Private Insurance Partnerships (PPIP)
Overview
Narrowing the protection gap requires a collaborative effort between multiple parties, including governments, insurance supervisors (including both market conduct regulators and prudential supervisors) and the insurance sector. The combination of their perspectives can lead to the development of comprehensive strategies that bolster the ability of economies to withstand and recover from these events.
Multi-stakeholder collaboration could include several approaches to increase insurance coverage, such as:
- Improving risk awareness and financial literacy
- Investing in risk prevention and reduction
- Promoting the availability and uptake of private insurance by regulators and/or supervisors.
Collaboration can also take the form of a formal partnership between the public and private sectors, such as by establishing public-private insurance programs (PPIPs). PPIPs can take several forms of cooperation between private insurers and governments, ranging from provision and sharing of data on natural hazards to joint efforts on preventive measures and catastrophe risk insurance programs involving risk-sharing among private insurers and governments.
PPIPs can leverage the strengths of both the public and private sectors.
- Governments can provide de-risking and enable access to public sector data and information.
- Insurance supervisors can provide advice and regulatory oversight.
- Private insurers can contribute their expertise in underwriting, risk assessment, and claims management, as well as their capacity to bear risk.
Where private (re)insurance solutions are not available, sharing risks and costs through these partnerships could be an option. Well designed, PPIPs can address affordability issues or gaps in coverage for highly exposed policyholders. They can also promote solidarity in responding to natural hazard risks across regions. Finally, they can promote the role of technology in fostering the availability of quality risk-related data.
The G7 High-Level Framework for Public-Private Insurance Programmes against Natural Hazards sets out considerations for countries exploring these programmes. It is particularly relevant to policy makers and insurance regulators and supervisors. The framework provides a step-by-step guide illustrating the different phases of development of a PPIP for disaster risk finance.
An important first step is to assess exposure to natural hazards
The framework encourages countries to explore a range of possible actions to address protection gaps. This includes assessing whether a PPIP is necessary and viable.
Before introducing new measures, policymakers and supervisors should evaluate existing measures and compare their effectiveness with the potential introduction of a PPIP. The assessment should examine:
- The impact and outcomes of existing measures.
- Where those measures have succeeded.
- Where improvements are needed.
Such assessments can help inform decisions about whether to adopt new measures, including a PPIP.
| Source | Title | Format | Description | Year |
|---|---|---|---|---|
| G7 (contributions from OECD and PGTF) | G7 High-Level Framework for Public-Private Insurance Programmes against Natural Hazards | Framework | The G7 High-Level Framework is a step-by-step guide for governments, policymakers and insurance supervisors considering public-private insurance programmes (PPIPs) to reduce protection gaps arising from natural hazards such as floods, storms, wildfires and earthquakes. | 2024 |
| OECD | Enhancing financial protection against catastrophe risks: the role of catastrophe risk insurance programmes | Policy paper | This report aims to help governments strengthen financial resilience against catastrophic risks. It provides a framework to assess the need for government-supported financial protection and examines approaches to supporting insurance coverage for wildfires and floods in particular – as two important and growing risks in many countries. | 2021 |
| Geneva Association | Addressing growing protection gaps through better public-private insurance programmes | Policy paper | Examines how public-private insurance programmes can help close growing protection gaps from disasters and other large-scale risks. It outlines a three-pillar approach: investing in risk reduction, strengthening private insurance markets and using carefully designed public support to make insurance more available, affordable and sustainable. | 2026 |