Executive Summary. Climate Risk Insurance (CRI Challenges) 1 P a g e

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2 Executive Summary RFPI Asia III stands for Regulatory Framework Promotion of Pro-Poor Insurance Markets in Asia Phase 3. Its goal is - The strategic and technical prerequisites of high-quality climate risk insurance for extremely poor, poor and at-risk people have been created. The regional Program will be implemented in three partner countries namely - Indonesia, the Philippines, and Vietnam and will contribute to their national implementation of the 2030 Agenda: SDG 1 No poverty, SDG 2 No hunger, SDG 5 Gender Equality, SDG 8 Sustainable economic growth, and SDG 13 Climate adaptation measures. Essential Program outputs are: 1) National CRI concept papers are available; 2) Capacities of public and private actors to develop high quality CRI products are improved; 3) Proposals for CRI-relevant customer-oriented digital technologies are available; 4) The MEFIN network has established its presence as the knowledge hub of CRI. (Annex 2) The Program Approach will employ - 1) Capacity development measures; 2) Involvement of individual people (specialists and managers); 3) Involvement of organizations (insurance companies, aggregators and networks); 4) Involvement of civil society (selected community groups); and 5) Involvement of institutional framework actors (ministries and supervisors). Climate Risk Insurance (CRI Challenges) The following are the challenges noted on implementing CRI in Viet Nam. Disaster risk insurance is a new concept and model for Vietnam. Currently, insurance companies give greater priority for the development of other types of voluntary insurance such as retirement, health, life insurance, properties and vehicles, etc., all of which are feasible, affordable and have good markets, low risk and high profit (VinaRe). Awareness of communities, businesses and individuals about insurance in general, disaster risk insurance in particular remains low. (Low income) people do not have the habit of buying insurance products with their own money but often rely on the support of the state (VinaRe, IAV and ISA) The insurance industry in Vietnam is still in its childhood; disaster risk insurance products are not available as a separate product, but often combined or added on product into the property and engineering insurance products (fire, special risk, comprehensive risk asset, etc.) Technical infrastructure for developing disaster risk insurance has not really developed, the database is lacking and dispersed. In addition, the quality of risk forecast and cost estimation for preventing and recovery is still limited. Enterprises, organizations, smallholders or even insurance companies do not have full awareness of disaster risks and insurance solutions to prevent these risks. Policy and legal frameworks to support development of disaster risk insurance are still under development and constrained and small scaled. The roadmap for implementation is not clear and implementation guidelines are not yet available (Bao Minh Corp, VinaRe). 1 P a g e

3 Understanding CRI Three presentations 1) Integrated Climate (and Disaster) Risk Management, and 2) CRI: Concept and Practices, were presented by Dr Malagardis and Integrating valuations of disaster risk and 3) Climate change adaptation into planning by Ms. Jenty Kirsch Wood, UNDP Viet Nam to broaden understanding of attendees on CRI. Highlights follow: Integrated Climate (and Disaster) Risk Management 1) Insurance does not reduce but transfers residual risks; It may not be suitable in all cases and is not a stand-alone remedy to manage climate risks, but is one instrument within an integrated climate risk management approach; 2) Given the age of the new normal marked by more frequent and stronger natural disasters, an integrated climate and disaster risk management approach becomes necessary; 3) The presentation shared a MCII/GIZ-developed integrated climate and disaster risk management model with five stages: a) Prevention measures that help prevent or minimize possible damage from an event; b) Retention and Transfer conduct cost-benefit analysis to determine if predisaster financing or insurance would be appropriate; c) Preparedness a complex set of activities such as setting up early warning systems, developing contingency plans, organizing various activities such as stockpiling of equipment, and coordination and training as cross-cutting issues; d) Response all emergency measures primarily aimed to saving human lives in the event of natural disaster; e) Recovery rebuilding efforts after the disaster; infrastructure and other areas of society must be rebuilt so that people can resume their livelihoods as quickly as possible (Annex 3). CRI: Concept and Practices. A major consideration in CRI is how to close the protection gap. The presentation shared a model that summarizes Which risk? needs protection, Who carries the risk? and Risk transfer solutions at the micro, pooling and macro levels (Annex 4). The presentation also shared on the G7 InsuResilience the G7 CRI Initiative in recognition of the important role CRI play in addressing adverse impacts of climate change. The following CRI schemes were shared 1) Caribbean and Central American Catastrophe Risk Insurance Facility: Insurance scheme covering tropical cyclones and earthquakes in Caribbean small island states. Currently expanding to Central America. New insurance products to cover excess rainfall and cyclones under development; 2) African Risk Capacity: Drought insurance for members of the AU in combination with early warning systems and contingency planning. Currently expanding to new countries. Founded by G7 partners GER, JAP, UK, and USA together with World Bank and Pacific Island countries; and 3) Pacific Catastrophe Risk Insurance Facility Insurance scheme covering tropical cyclones and earthquakes in Pacific Island countries. Founded by G7 partners GER, JAP, UK, and USA together with World Bank and Pacific Island countries. Integrating valuations of disaster risk and climate change adaptation into planning (By UNDP Vietnam) UNDP aims to help strengthen Viet Nam: i) information on assets at risk and historical losses; ii) Information on how climate change will impact key sectors (how much it will get worse) iii) Information on current losses (what you are currently spending) and iv) Information on much it will cost to fix it (now and in the future). UNDP has piloted projects in mapping, collecting information in mountainous areas, integrating bottom up and top down information to consolidate comprehensive data of (disaster) damages. The NAP Agriculture project has worked with more than 500 communes in 2 years to collect information and currently in the analysis process. The project aims at exploring the impact of disaster risk and mapping the vulnerability for each sector. Vietnam also has some of the risk management tools supported by UNDP include: i) Community-based disaster risk management documents; ii) Community-based disaster risk assessment guidelines; The Vietnam Climate Risk Index website has been created at 2 P a g e

4 Suggested Strategies A number of strategies were likewise proposed to address the challenges. In terms of addressing specific areas of concern, the following strategies were suggested. Policy-Related Strategies: advocacy for policy reformulation and readiness for CRI and completion of legal framework for agriculture insurance in Vietnam. Policy study and recommendation to be taken placed by stakeholders and the NTF so as to pave the way for institutionalization CRI and advocacy for the utilization of public funds for CRI, harmonization of relevant policies that involved different ministries, government agencies and (private) actors and incentivization scheme for private sector. Product-Related Strategies: product prototype recommendation; introduction of index based insurance products Technology-Related Strategies: create a comprehensive database of disaster risk, risk mapping; Awareness and Outreach-Related Strategies: Awareness raising for financial and insurance literacy for farmers via mass organization. Partnership-Related Strategies: Promotion of Public Private Partnerships for CRI; Aligned priorities across all panel discussion members: Policy-Related: Implementing guidelines on Agricultural Decree 58 (Integration of CRI/DRI solutions in the agriculture sector) Business Model (Product-Related): including Index-based insurance product Use of Technology in Product delivery and claims management (payment, etc.), creating Learning Management Platform and application in Risk and vulnerability mapping Capacity development and Awareness Campaigns targeting insurance companies, government staff and vulnerable groups to help them change their behaviours. Operationalizing RFPI Asia III GIZ RFPI Asia III Promoting Climate Risk Insurance in 3 Southeast Asian Countries Implementation of RFPI III conceptual framework for Vietnam Program Approach RFPI III is making use of the model of MCII/GIZ 2017 in enhancing resilience through 5 phases of Disaster Risk Management: prevention, preparedness, residual risk transfer, response and recovery. four Insurance, as among the instruments, in residual risk transfer shall be designed as part of the integrated solution of risk management. RFPI III program is implementing (4) components: 1) policy and regulation, 2) business model, 3) use of technology and 4) CRI hub through the MEFIN Network1. For Vietnam, the program components are being implemented through the framework below. 1 MEFIN or Mutual Exchange Forum for Inclusive Insurance is a Network of insurance regulatory authorities in Asia working for a peer-topeer exchange of knowledge and experiences with the insurance industry. See more details at 3 P a g e

5 Conceptual framework Entry points of the project Our approach Steering & Management Component 1: Policy and Regulation Developing implementing guidelines for Decree 58/2018/ND-CP Expansion of Agriculture Insurance (Integration of CRI/DRI solutions in the agriculture sector). Formulation of policy framework on integration of CRI/DRI solutions in Microinsurance market development. Capacity development (such as in risk assessment, formulation and dissemination of the implementing guidelines). Component 2: Business model CRI product development (including index-based). Capacity development on o Risk assessment o Modelling o Product development o Weather-index Based Insurance CRI awareness campaign and advocacy. Component 3: Use of Technology Understanding the challenges and gaps on effectiveness, efficiency & transparency of insurance delivery Analysis of regulation, supervision issues & gaps related to use of technology for: o Risk and vulnerability mapping o Insurance policy acquisition, delivery and claims management Raising awareness, advocacy and Learning Management Platform Mapping of public and private agencies that can provide support in areas of: o o o o o Policy and regulatory reform Data Funding Network Expertise in risk assessment, product development, use of technology, etc. Engaging appropriate agencies in program steering and technical work Developing CRI solutions for two market segments: Microinsurance and Agriculture Determine options for CRI product development: o Standard products consortium o of insurers panel of reinsurers Re-engineering of current MI and Agriculture products company level approach Enhancing insurance delivery mechanism o Socio-political organizations o Financial institutions o Social Protection programs o InsurTech platforms Competition of insurtech companies to develop the technology platforms. Workshops to develop key (digitized) key messages on CRI. Information dissemination and advocacy. Sandboxing Component 4: CRI Hub through the MEFIN Network Use the existing structure of the Webinars MEFIN Network for peer-to-peer Public Private Dialogue conferences learning and public private Publication of knowledge products dialogue National Task Force on CRI composed of public agencies and insurance association program steering and direction 3 Technical Working Groups for technical and operational works, composed of public and private agencies Each of the components 1 to 3 has a TWG 4 P a g e

6 Steering Structure To steer the RFPI Asia III initiatives, a mechanism comprised of the National Task Force (NTF), two Technical Working Groups (TWGs), and a Secretariat was proposed at the OPW. The general descriptions of each are given below. NTF: Purpose and Scope of Work 1) Serves as the steering body of RFPI III CRI Program; 2) Provides strategic direction of the program and approve its annual plans and progress reports; 3) Approves the scope of work and plans of the TWGs, and the composition of TWG members who can contribute to CRI market development; and 4) Participates in peerto-peer knowledge sharing and dialogues for CRI policy and regulatory reforms through the MEFIN Network. TWGs Two TWGs will be created which correspond to the program components of RFPI III as follows: 1) TWG on Policy and Regulation (for component 1), 2) TWG on Business Model and Use of Technology (combined for components 1 and 2). The 4th component of the program, which deals with CRI knowledge exchange and public private dialogue (PPD), will be managed through the existing platform of the MEFIN Network. GIZ RFPI Asia III will co-chair the NTF and take the secretariat role to the National Task Force and all 2 Technical Working Groups; 2) Conduct studies; 3) Conduct seminars to inform the works of the TWGs; 4) Provide technical advice to the TWGs especially in the production of outputs. Conclusion The workshop was conducted aligned with the plan and agenda and generally achieved expected goal and results. Participants in the workshop were balanced among the public agencies, associations, businesses, socio-political organizations, non-governmental organizations and gender factors were also considered in the invitations. The workshop has provided a general picture of disaster risk insurance and agriculture insurance in Vietnam and proposed a roadmap for project implementation. Participants highly appreciate this workshop as a good opportunity, show their interest to cooperate with the project during the implementation process. Every partner looks forward for the project deliverables within 3 years of project implementation; which are expected to create a premise for the development of the future market for disaster risk insurance in Vietnam. Way forward Three next steps were agreed upon toward the close of the operational planning workshop. These are: From 4-8th Mar 2019, the project will send an official letter to the relevant stakeholders about the establishment of NTF. Members of NTF should be the similar-level representatives from the stakeholders to ensure that decisions can be made immediately, but not asking for approval of their leaders. Operational planning workshop report to be shared with participants on 11 th Mar Invitation to the 1 st task force meeting on 27 th Mar P a g e

7 Annex 1: Agenda of Operational Planning Workshop for Vietnam February 2019/Pan Pacific Hotel Day 1 27 Feb Activity/Topic 8:30 9:00 Registration of participants 9:00 9:15 Welcome and Opening Remarks Dr. Antonis Malagardis, RFPI Asia III Program Director 9:15 9:30 Opening speech from GIZ Vietnam Mr. Jasper Abramowski - Country Director, Deutsche Gesellschaft für Internationale Zusammernarbait (GIZ) GmbH - GIZ Office in Vietnam 9:30 9:45 Keynote messages from the Ministry of Agriculture and Rural development Mr. An Van Khanh, Vice director of Department of Cooperatives and rural development 9:45 10:00 Keynote messages from the Insurance Association of Vietnam 10:00-10:10 Photo Session 10:10 10:30 Coffee break Mr. Bui Gia Anh, General Secretary, Insurance Association of Vietnam 10:35 10:50 Integrated Climate (and Disaster) Risk Management 10:50 11:15 CRI: Concepts and Practices Dr. Antonis Malagardis, RFPI Asia III Program Director Dr. Antonis Malagardis, RFPI Asia III Program Director 11:15 11:30 Highlights of CRI and DRI Challenges and Strategies in Vietnam Government Perspective 11:30 13:30 Lunch Mr. Bui Thanh Hai, Insurance Supervisory Authority, Ministry of Finance 13:30 13:50 Disaster risk financing and insurance in Vietnam Mr. Nguyen Manh Linh, Deputy Chief Executive Officer (CEO), Vietnam Reinsurance Corporation 13:50 14:10 Developing Insurance Products for Agriculture: Private Sector Perspective Mr. Nguyen Ngoc Anh, Head of Technical and Asset, Bao Minh Insurance Corporation 14:10 14:30 Emerging cost-related decision-making tools for climate change risk in Viet Nam Ms. Jenty Kirsch Wood, United Nations Development Program in Vietnam :45 Highlights of CRI and DRI Challenges and Strategies in the Vietnam Private Sector Perspective 14:40 15:00 RFPI III: An Overview Shayne Rose Bulos, Senior Advisor, GIZ RFPI Asia III Dr. Antonis Malagardis, RFPI Asia III Program Director 15:00 15:30 Conceptual Framework of the RFPI Asia III Project Components 6 P a g e

8 15:30-15:45 Coffee break Dante Portula, RPFI Asia III Senior Adviser 15: Discussion: Harmonizing Government, Private sector and Development Sector Initiatives on Climate and disaster risk Insurance in Vietnam Commentators: 16:30 16:45 Wrap-Up Mr. Ta Huu Nghia, Ministry of Agriculture and Rural Development Mr. Bui Thanh Hai, Insurance Supervisory Authority Mrs. Trinh Tuyet Nga, Insurance Association of Vietnam Mr. Nguyen Manh Linh, Vietnam Reinsurance Cooperation Mr Nguyen Ngoc Anh, Bao Minh Corporation Mrs. Tran Thu Ha, Vietnam Women s Union Mr. Dante Portula, RFPI Asia III Facilitator: Dr. Antonis Malagardis, Program Director of GIZ RFPI Dr. Antonis Malagardis Day 2 28 Feb Activity/Topic 8:30-9:00 Registration of participants Preliminaries 9:00 9:10 Day Two Overview Operational Planning 9:10 9:20 Mechanics of group discussion RFPI Asia III 9:20 10:20 Operational Planning; Plenary discussion 10:20-10:30 Coffee break 10:30 11:00 RFPI 3 Steering Structure and Process: A Proposal Dante Portula, Senior Advisor, GIZ RFPI Asia III 11:00 11:30 Way forward and closing session Dr. Antonis Malagardis, Highlights of the GIZ Social Protection Program in Indonesia, Ms. Cut Sri Rozanna (Aya), GIZ Indonesia 7 P a g e

9 8 P a g e Annex 2: RFPI III Indicators Diagram

10 Annex 3: Integrated Climate (and Disaster) Risk Management Prevention This phase comprises all the measures that help prevent or minimize possible damage from an event. Recovery After the impact of a natural hazard, infrastructure and other areas of society must be rebuilt, so that people can resume their livelihoods as quickly as possible. Response This phase comprises all emergency measures aimed at saving human lives in the event of a natural disaster. Retention & Transfer Even when preventative actions have been taken, some residual risk remains. In the Retention & Transfer Phase, it is important to conduct a costbenefit analysis to determine if pre-disaster financing or insurance would be appropriate. Preparedness Preparedness contains a complex set of activities such as setting up early warning systems, developing contingency plans, organizing various activities such as stockpiling of equipment, and coordination and training as cross-cutting issues. 9 P a g e

11 10 P a g e Annex 4: Closing the protection gap

12 Annex 5: Participants List No Name of participants Organization 1 Mr. An Van Khanh Ministry of Agriculture and Rural Development (MARD) - Department of Cooperative and Rural development 2 Mr.Ta Huu Nghia Ministry of Agriculture and Rural Development (MARD) - Department of Cooperative and Rural development 3 Mrs. Dinh Thi Hoa Ministry of Agriculture and Rural Development (MARD) - Department of Cooperative and Rural development Position Vice director Head of Social welfare Staff of Social welfare 4 Mrs. Nguyen Thi Thu Ha Vietnam Disaster Management Authority (MARD) - Center for Technology and Policies for Disaster Prevention Officer 5 Mr. Bui Huu Phu Ministry of Finance (MOF) - Insurance Supervisory Authority (ISA) 6 Mr. Bui Thanh Hai Ministry of Finance (MOF) - Insurance Supervisory Authority (ISA) 7 Mrs. Do Thuy Duong Ministry of Finance (MOF) - Insurance Supervisory Authority (ISA) Vice head of non - life Head of non - life Staff of non - life 8 Mrs. Dao Thu Hang Ministry of Finance (MOF) - Insurance Supervisory Authority (ISA) 9 Mrs. Hoang Thi Mai Huong 10 Mrs. Tran Thi Thu Ha Vietnam Famer's Union (VFU) Vietnam Women's Union (VWU) Staff of non - life International Cooperation Department Director of Microinsurance Fund 11 Mr. Bui Gia Anh Insurance Association of Vietnam (IAV) General Secretary 12 Mrs. Trinh Tuyet Nga 13 Mrs. Tran Phuong Dung 14 Mr. Nguyen Ngoc Anh Insurance Association of Vietnam (IAV) Insurance Association of Vietnam (IAV) Bao Minh Insurance Cooperation (BIC) Head of Non - life Program officer Head of Property and Engineering 15 Mr. Do Anh Tu Agriculture Bank Insurance Cooperation (ABIC) Staff of Property and Engineering 16 Mr. Nguyen Manh Linh Vietnam National Reinsurance Corporation (VINARE) Deputy CEO 17 Mr.Duong Thanh Tung Vietnam National Reinsurance Corporation (VINARE) Risk Management Manager 11 P a g e

13 18 Mrs. Jenty Kirsch - Wood 19 Mrs. Marina Grunder UNDP Vietnam CIAT/CGIAR Senior Technical Advisor De - RISK program 20 Mrs. Jana Korner CIAT/CGIAR De - RISK program 21 Dr. Jasper Abramowski GIZ Viet Nam Country Director 22 Mr. Ole Henriksen GIZ Agriculture Program Team Leader 23 Mr. Olaf Neussner GIZ Flood Proofing Program Technical Adviser 24 Mr. Timm Walker GIZ Mekong Climate Resilience Programme in Vietnam Technical Adviser 25 Dr. Tim McGrath GIZ Flood Proofing Program Program Manager 26 Mr. Nguyen Thanh Binh 27 Dr. Antonis Malagardis GIZ SAS Program RFPI Asia III Program officer Program Director 28 Mr. Dante Portula RFPI Asia III Senior advisor 29 Mrs. Shayne Bulos RFPI Asia III Senior advisor 30 Mrs. Pham Phuong Mai 31 Mr. Nguyen Sy Phuong 32 Mrs. Cut Sri Rozanna RFPI Asia III RFPI Asia III GIZ Indonesia -Social Protection Programme Program officer Project officer Principal Advisor 33 Mrs.Anna Fonda GIZ Indonesia -Social Protection Programme Program officer 34 Mr. Nguyen Van Hiep 35 Mr. Nguyen Van Tang Viet Nam Television - VTV10 Reporter/News Anchor Consultant 36 Mrs. Le Ngoc Anh Interpreter 12 P a g e