07 January 2022, Suva, Fiji
The Reserve Bank of Fiji (RBF) has approved the admission of a parametric insurance product developed by the United Nations Capital Fund’s (UNCDF) Pacific Insurance and Climate Adaptation Programme (PICAP) and underwritten by its partners, namely FijiCare Insurance Limited and Sun Insurance Limited, to the testing stage of the FinTech Regulatory Sandbox (“Sandbox”).
The Sandbox is intended for live testing of innovative solutions, particularly those that help to broaden access to various finance services among underserved segments of the population. These new financial solutions must fulfil requirements and eligibility criteria defined in the Financial Sector Development Policy Statement No. 2 FinTech Regulatory Sandbox Guidelines. As a flagship UNCDF regional initiative, the Pacific’s first climate risk parametric micro-insurance product is considered a natural fit for the Sandbox.
RBF Governor, Mr Ariff Ali, acknowledged that “Since the launch of the Sandbox in 2019, RBF has received submissions from a number of entities with innovative financial solutions for the Fijian market. The parametric insurance product developed by PICAP and its partners is the first solution to be given an approval for live controlled testing with customers, subject to certain conditions and reporting requirements.”
He added that “The simplicity of the product design as well as the use of technologies for weather index modelling, on-boarding beneficiaries and automating pay-outs upon the occurrence of predefined weather triggers makes the product a first for Fiji. The Sandbox will help provide oversight and control prior to commercial deployment in the market.”
Governor further remarked that “The RBF fully supports PICAP with this initiative and acknowledges its commitment to making climate insurance affordable and accessible.”
PICAP and its private sector partners and aggregators will be part of the test for a period of 12 months from December 2021 during which they will work closely with the RBF to fulfil the conditions stipulated under the approval for Sandbox testing. The test phase of the product was officially launched by the Attorney-General and Minister for Economy, Hon. Mr Aiyaz Sayed-Khaiyum, in August 2021 and was described as an ‘impressive example of Pacific innovation.’
Once made available, the micro insurance product will offer a maximum cover of FJ$1,000.00 for cyclones and aims to enhance the financial resilience for vulnerable communities. Funding will be provided by the Governments of Australia, New Zealand, India and the Luxembourg’s Climate and Energy Fund.
“The Pacific region’s first ever parametric microinsurance and iOnboard digital on-boarding platform are path-breaking initiatives, set to redefine the climate disaster risk financing, insurance and FinTech frontiers. UNCDF is extremely privileged to have developed the first product that has been admitted for testing under the RBF Regulatory Sandbox” said Krishnan Narasimhan, Programme Manager of the Pacific Insurance and Climate Adaptation Programme.
The RBF is the central bank of the Republic of Fiji established under the RBF Act 1983. The principal purposes of the Bank are to regulate the issue of currency and the supply, availability and international exchange of money, to promote monetary stability, to promote a sound financial structure, to foster credit and exchange conditions conducive to the orderly and balanced economic development of the nation, and to regulate the capital markets and insurance industry. For more information, visit www.rbf.gov.fj.
The UN Capital Development Fund makes public and private finance work for the poor in the world’s 46 least developed countries (LDCs). UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. UNCDF’s financing models work through three channels:
(1) inclusive digital economies, which connects individuals, households, and small businesses with financial eco-systems that catalyse participation in the local economy, and provide tools to climb out of poverty and manage financial lives;
(2) local transformative finance, which capacitates localities through fiscal decentralisation, innovative municipal finance, and structured project finance to drive local economic expansion and sustainable development; and
(3) investment finance, which provides catalytic financial structuring, derisking, and capital deployment to drive SDG impact and domestic resource mobilisation.
For more information, visit www.pacific.undp.org
For any queries please contact;-
Communications Officer (Regional)
United Nations Development Programme
414 Victoria Parade, Suva, FIJI
Tel: +(679) 331-0515 | +(679) 9146827