On Thursday 11 July 2024, Luxembourg's Ministry of the Environment, Climate and Biodiversity, the Ministry of Finance, the European Investment Bank (EIB) and BlueOrchard announced that the Luxembourg-EIB Climate Finance Platform (LCFP) is supporting BlueOrchard’s climate insurance equity fund.
The LCFP will provide €5 million for impact investor BlueOrchard's $100 million climate insurance fund, with the backing of the Luxembourg government.
As reported in the press release, the LCFP seeks to catalyse private and public sector investment into high-impact companies in emerging markets involved in insuring climate change mitigation and adaptation projects, including projects addressing losses and damages caused by climate change.
"Protecting communities from the social and economic impact of climate change is crucial and can be enhanced through climate insurance and better understanding of the local impact of extreme and more uncertain weather," commented Luxembourg's Minister of Finance, Gilles Roth. "Luxembourg is pleased to support the new BlueOrchard Insurance resilience fund as part of our impact focused climate cooperation with the European Investment Bank. This cooperation demonstrates how private and public finance, climate expertise and climate insurance can mitigate the impact of climate change on vulnerable regions."
"Luxembourg is committed to climate action and is pleased to support improved access to climate insurance to effectively protect vulnerable communities in developing countries from losses and damages caused by climate change, including extreme weather events and slow onset events. Unlocking private and public investment is critical to tackling the climate crisis in developing countries," added Luxembourg's Minister of the Environment, Climate and Biodiversity, Serge Wilmes. "The new support for the BlueOrchard InsuResilience Fund II by the Luxembourg-EIB Climate Finance Platform will help vulnerable communities to be better prepared for climate risks and recover more quickly from climate disasters."
The BlueOrchard-managed InsuResilience Investment Fund Private Equity II (IIF II) is expected to contribute to increasing access to affordable insurance and expanding the provision of climate insurance by providing equity investments in fast-growing companies that provide and support climate insurance, including insurance technology providers and specialist insurance companies and brokers.
New investment backed by the IIF II is also expected to help enhance climate resilience in Asia, Africa and Latin America by providing coverage against unavoidable climate related losses and damages in developing countries, including extreme weather events and slow onset events.
"The European Investment Bank is committed to fostering climate resilience around the world and our latest collaboration with BlueOrchard will help to address barriers holding back access to climate insurance in countries most impacted by climate change," said Ambroise Fayolle, EIB Vice President.
"Our latest partnership with the EIB reflects our shared dedication to building resilience against the consequences of climate change and supporting the most vulnerable regions and households," noted Philipp Mueller, CEO of BlueOrchard.
Specialist investment is considered a critical component in providing insurers with the necessary climate data and expertise to encourage risk-reducing activities. The IIF II aims to enable more resilient communities by directly investing in expanding resilience insurance, covering agricultural and natural catastrophe risks.
Additional equity capital provided by the fund is expected to strengthen capabilities along the insurance value chain to better cover weather-related losses through improved access to climate data, expertise and distribution, allowing stakeholders to manage climate risk effectively and on a commercial basis. This should facilitate improved coverage of losses and expand climate insurance to farmers and communities in Asia, Africa and Latin America.
The cooperation between the EIB, BlueOrchard and the Luxembourg government follows the successful deployment of the predecessor strategy, the InsuResilience Investment Fund. To date, the predecessor fund has made nine investments across emerging markets, reaching nearly 58 million beneficiaries in underserved and economically vulnerable communities to mitigate the effects of climate change (as of the third quarter of 2023), with the objective of reaching 70 to 110 million beneficiaries by 2025.
