The Enabling Environment for Disaster Risk Financing in Fiji: Country Diagnostics Assessment

By Asian Development Bank

This country diagnostic assessment seeks to strengthen financial preparedness for disasters in Fiji, focusing on insurance and other risk transfer instruments. It explores the current application of disaster risk financing solutions by the government, businesses, and individual households; related demand and supply constraints; and opportunities for improvement. The assessment forms one of a series of country diagnostics undertaken using a common methodology to determine the state of the enabling environment for disaster risk financing.

• Language: English
• Publisher: Asian Development Bank
• Release date: Feb 1, 2019
• ISBN: 9789292615055

Book preview

THE ENABLING ENVIRONMENT FOR DISASTER RISK FINANCING IN FIJI

COUNTRY DIAGNOSTICS ASSESSMENT

FEBRUARY 2019

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2019 Asian Development Bank

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Some rights reserved. Published in 2019.

ISBN 978-92-9261-504-8 (print), 978-92-9261-505-5 (electronic)

Publication Stock No. TCS190008-2

DOI: http://dx.doi.org/10.22617/TCS190008-2

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Notes:

In this publication, $ refers to United States dollars.

On the cover (from left to right): Roofs was carried by strong winds caused by cyclone in Fiji. Fijian woman boarding up her house during a tropical cyclone storm in the Yasawa Islands in Fiji (photos by Robert Armstrong and Rafael Ben-Ari).

Contents

Tables, Figures, and Boxes

Acknowledgments

This report was prepared under Technical Assistance (TA) 9007: Strengthening the Enabling Environment for Disaster Risk Financing (Phase 1). The TA was executed by the Asian Development Bank (ADB) in collaboration with the Government of Fiji.

Charlotte Benson (Principal Disaster Risk Management Specialist, Climate Change and Disaster Risk Management Division, Sustainable Development and Climate Change Department, ADB) and Arup Chatterjee (Principal Financial Sector Specialist, Financial Sector Group, Sector Advisory Service Cluster, Sustainable Development and Climate Change Department, ADB) provided oversight, direction, and technical advice for the report, while staff of ADB’s Pacific Subregional Office in Fiji provided support during the mission.

The report was produced by a team of ADB consultants comprising international consultants Rodolfo Wehrhahn (team leader, insurance and capital market regulatory specialist), Arman Oza (agriculture insurance and microinsurance specialist), Lawrie Savage (insurance regulation specialist), and Richard Walsh (public sector disaster risk specialist); national consultant Gilbert Veisamasama (insurance industry specialist); and ADB consultant Maria Cristina Pascual (Project Coordinator).

The report benefited extensively from the generous participation by, and courteous interaction with, the many key organizations listed below. The report team expresses great appreciation to the staff of these organizations for their time and candid opinions.

Government Agencies

Department of Housing

Department of Social Welfare

Fiji Meteorological Service

Ministry of Agriculture

Ministry of Economy

Ministry of Forests

Ministry of Infrastructure and Transport

Ministry of Rural and Maritime Development and National Disaster Management

Reserve Bank of Fiji

South Pacific Stock Exchange

Private Sector

Australia and New Zealand Banking Corporation

Bank of Baroda

Bank of South Pacific Health Care Ltd.

Fiji Care Insurance Co. Ltd.

HFC Bank

Insurance Holdings (Pacific) Ltd.

Life Insurance Corporation of India

New India Assurance Co. Ltd.

QBE Insurance Ltd.

Sun Insurance Co. Ltd.

Tower Insurance Fiji Development Bank

Bilateral and Multilateral Agencies

Department of Foreign Affairs and Trade, Australia

Japan International Cooperation Agency

United Nations Capital Development Fund

Development and Research Agencies, and Associations

Fiji Crop and Livestock Council

Fiji Hotel and Tourism Association Secretariat

National Centre for Small and Micro Enterprise Development

Sugar Cane Growers Council

Sugar Cane Growers Fund

Currency Equivalent

(as of 31 January 2018)

Abbreviations

Note: The fiscal year (FY) of the Government of Fiji ends on 31 August. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2017 ends on 31 August 2017.

Executive Summary

This country diagnostics assessment reviews the current disaster risk financing (DRF) landscape and enabling environment in Fiji, with a particular focus on risk transfer instruments—insurance, reinsurance, and capital markets.

The assessment is based on a modified version of the W&W Development Framework for accommodating international best practice, as well as public and private sector stakeholders’ inputs. This framework allows insight into existing or perceived demand and supply barriers shaping and, in part, restricting the development of an enabling environment for DRF in Fiji. Within this framework, six areas relevant to the development of insurance and capital market solutions for DRF are reviewed: government policy; social protection policy; unlicensed competition; economic conditions; credibility of the insurance, reinsurance, and capital markets providers; and product appeal.

A risk-layered structure is proposed for the stimulation, development, and implementation of financially sustainable and scalable DRF strategies and solutions in Fiji. The assessment identifies gaps and opportunities for enhancing the enabling environment for public sector DRF instruments, insurance, reinsurance, and insurance-linked securities through the capital markets. The below table recommends improvements to the DRF enabling environment.

The diagnostics tool and a toolkit that describes the proposed enabling environment actions and their importance, the DRF tools and instruments of general use, including a glossary of technical terms, completes the suite of documents of this technical assistance.

Table: Key Recommendations for Strengthening the Enabling Environment for Disaster Risk Financing

CTP = compulsory third party, DRF = disaster risk financing, para = paragraph, PCRAFI = Pacific Catastrophe Risk Assessment