SCOPING STUDY ON PARAMETRIC INSURANCE AND DE-RISKING CLIMATE FINANCE INVESTMENT
Please note that the deadline is based on Korean Standard Time Zone (KST, UTC+9)
INTRODUCTION TO GGGI
The Global Green Growth Institute (GGGI) is a treaty-based international, inter-governmental organization dedicated to supporting and promoting strong, inclusive and sustainable economic growth in developing countries and emerging economies. To learn more please visit about GGGI web page.
GENERAL INFORMATION
Position: Individual Consultant โ Scoping Study on the Contribution of Parametric Insurance Products to De-risking Climate Finance Investment in the Pacific Region Project: Greening the Pacific Financial Systems (GPFS) Programme Duty Station: Suva, Fiji Contract Duration: July 2025 โ November 2025 Consultant Level: 4 Total Fee: 20,000
PROJECT BACKGROUND
The Global Green Growth Institute (GGGI), a treaty-based organisation based in Seoul, Korea, is an intergovernmental organisation that promotes the \"green growth\" economic model focused on poverty reduction, job creation, social inclusion, and environmental sustainability. GGGI collaborates with countries globally to develop green growth policies and projects that benefit millions, partnering with governments, institutions, and the private sector to create efficient, sustainable economies that use natural resources wisely and are resilient to climate change.
Considering the growing exposure of Pacific Island Countries (PICs) to climate-related and geophysical shocks that threaten public finances, financial stability, and livelihoods, GGGI, with support from Agence Franรงaise de Dรฉveloppement (AFD), is implementing the Greening the Pacific Financial Systems (GPFS) programme. The initiative supports central banks and regional financial regulators in strengthening their ability to identify, assess, and manage climate-related risks within the financial system. The programme regularly reports its engagements with central banks to the Pacific Islands Regional Initiative (PIRI) Leadersโ Roundtable, organised by the Alliance for Financial Inclusion (AFI). At the 2024 PIRI Leadersโ Roundtable, Pacific central bank governors requested GGGI to explore parametric insurance as a strategic instrument for addressing climate-related risks to financial systems. The request reflected the Pacific Central Bankโs interest in exploring its ability to influence climate action within its mandates.
Parametric insurance delivers predetermined payouts triggered by specific climate conditions or disaster events, like rainfall levels or wind speeds, eliminating the requirement for loss verification. The United Nations Capital Development Fund (UNCDF), the Pacific Catastrophe Risk Insurance Company (PCRIC), and the Global Shield Against Climate Risks currently play a central role in developing, delivering, and scaling parametric insurance in the region. Each institution engages with beneficiaries, governments, and the financial sector through distinct channels and delivery models.
The UNCDF, through its Pacific Insurance and Climate Adaptation Programme (PICAP), has led the deployment of micro and meso-level products for vulnerable households and informal workers, including smallholder farmers, fishers, and market vendors. Rather than directly issuing policies or handling claims, UNCDF supports local insurers such as Sun Insurance in co-designing and rolling out products. These products are developed in consultation with beneficiaries, cooperatives, and community-based organizations to ensure relevance and accessibility.
To extend coverage to hard-to-reach users, UNCDF works closely with cooperatives, credit unions, and government ministries, many of whom hold valuable data on underserved populations. Premiums are subsidised through external donor support to ensure affordability. As a result, UNCDFโs products in Fiji have reached over 44,000 households primarily via digital channels.
In contrast, PCRIC operates primarily at the sovereign level, offering disaster risk insurance to national governments across the Pacific. Under its pooled risk financing model, countries pay premiums into a regional fund that enables rapid payouts following pre-defined trigger events such as cyclones, earthquakes, and excessive rainfall. PCRIC engages mainly with national governments but could also cover state-owned enterprises. It does not extend to individual policyholders. Payouts are disbursed to national treasuries or finance ministries within two weeks of a qualifying event. Governments then determine how the funds are used in response.
The Global Shield Against Climate Risks, launched by the G7 and V20, is a global financing and coordination platform. It supports risk-pooling and insurance initiatives in vulnerable countries, including Pacific ones. While Global Shield does not issue insurance or disburse payouts, it plays a critical enabling role by offering premium subsidies, technical assistance, and financing facilities to reduce the cost of access to protection instruments for governments and low-income populations. It also facilitates alignment between governments, insurers, donors, and regulators to ensure that insurance products are integrated into national disaster risk and climate finance strategies.
Therefore, within this context, the consultant will examine how the central banks in Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu can integrate parametric insurance into their mandates and operations for climate risk governance. The study will consider the extent to which central banks currently identify, evaluate, and manage systemic financial risks stemming from climate events. It will explore whether and how the central banks can leverage parametric insurance as a liquidity instrument, a risk management tool, and/or a regulatory incentive for institutions under their supervision.
In addition, the consultant will further analyse how financial institutions such as public banks, commercial banks, microfinance providers, and credit unions might adopt parametric insurance to derisk their portfolios, particularly in sectors exposed to climate shocks like agriculture, fisheries, and housing. The study will also consider what macro, meso and micro-level instruments could be integrated into building the financial systems' resilience. This approach will draw on the experiences of insurers, cooperatives, digital payment platforms, and beneficiaries, ensuring that recommendations balance technical feasibility with financial inclusion and sustainability.
OBJECTIVES OF THE ASSIGNMENT
The overarching objective of this assignment is to assess the potential of parametric insurance as a tool to strengthen the capacity of central banks and financial regulators in the Pacific to identify, evaluate, mitigate, and manage climate-related risks within their financial systems. The study will cover six Pacific Island Countries: Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu and examine how parametric instruments can contribute to financial system resilience, de-risk climate-sensitive investments, and enhance liquidity response during disaster events. Specific objectives include:
Map the current parametric insurance in the Pacific, including products offered by private insurers/reinsurers, PCRIC, institutions such as UNCDF, and other partners, and assess their effectiveness in supporting financial resilience at different levels (macro, meso, and micro). Identify institutional, regulatory, and technical gaps that limit the use of parametric insurance by central banks, financial regulators, and supervised entities (such as banks, credit unions, and microfinance institutions). Analyse international best practices in applying parametric insurance for climate risk management, focusing on central bank engagement, financial institutions, public-private coordination and policy frameworks. Explore how protection mechanisms for MSMES across the Pacific could strengthen these economies' resilience. In particular, how the mechanisms can enhance MSMESโ resilience after a major climate event (e.g., a mechanism that could link insurance and credit, such as credit default protection or bundled loan-insurance packages). Propose context-specific recommendations on how central banks in the target countries can integrate parametric insurance into their existing financial risk frameworks, including options for sovereign, sectoral, and financial institution-level coverage. Identify mechanisms to link macro-level instruments with meso- and micro-level protection, ensuring that products also meet the needs of vulnerable groups. Address known demand-side challenges such as affordability, awareness, and payout reliability. Provide actionable guidance on how parametric insurance can be positioned to attract and complement climate finance, mainly through guarantees, blended finance, and liquidity support mechanisms.
DELIVERABLES AND PAYEMTN SCHEDULE
The consultant will undertake a comprehensive scoping study to explore how parametric insurance instruments can support financial system resilience and climate risk management in six Pacific Island Countries, including Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu. These activities are further segmented into the following sub-activities:
Stakeholder Engagement Identify and engage with key stakeholders, including the Central Banks of the PICS listed above, local insurers, governments, financial institutions, PCRIC, UNCDF, Global Shield, A2II, and climate finance investors. Conduct interviews and consultations to gather insights into the region's challenges and opportunities for parametric insurance. In addition, the consultant will engage central banks and financial regulators to understand how climate-related risks are identified, assessed, and managed within prudential frameworks and whether parametric instruments are being considered for use as reserve buffers, liquidity tools, or market development levers.
2. Assess the Impact of Existing Parametric Insurance on the Pacific Financial System
Evaluate frameworks in each country to understand the extent of supervision, licensing, product approval, and digital financial services integration related to parametric models. Analyze the scope, performance, and uptake of products offered by PCRIC, UNCDF, Global Shield, and other regional stakeholders. This includes their value-add compared to standard non-parametric insurance products currently available in Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu. Analyse the interaction between central and commercial/development banks, particularly in developing regulatory or incentive mechanisms that strengthen the financial sectorโs resilience to physical climate shocks. Examine how banks and financial institutions evaluate climate risk before offering new loans to their clients and how climate events impact their assets (nonperforming loans, liquidity, solvency ratios). Assess the current and potential impact of parametric insurance products on de-risking climate investments, de-risking banksโ credit portfolios, and enhancing financial resilience. Identify regulatory and supervisory frameworks applicable to parametric insurance products in Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu.
3. Comparative Analysis of International Parametric Insurance Models
Conduct a desk review of parametric insurance products in other small island countries and regions with a similar context to the program countries. Evaluate their design, implementation, and outcomes to identify transferable lessons for the Pacific. Examine best practices in risk pooling, pricing mechanisms, and payout structures to identify innovations suitable for replication in the Pacific. Examine global practices regarding the regulation and oversight of parametric insurance products.
4. Gap and Constraint Analysis
Identify gaps in current parametric insurance offerings in Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu, considering climate risks, market demand, and policy environments. Highlight the underserved sectors or geographies and assess potential barriers to product uptake. Provide an assessment of regulatory and institutional constraints hindering the growth of parametric insurance markets.
5. Recommendations and Action Plan
Develop practical recommendations for the central banks in Fiji, Papua New Guinea, the Solomon Islands, Samoa, Tonga, and Vanuatu to improve the design and adoption of parametric insurance products as a climate risk tool. The recommendations will be tailored to these countries' central banks. Propose an action plan for integrating these recommendations into the climate finance and risk strategies of the central banks of Fiji, Papua New Guinea, Solomon Islands, Samoa, Tonga, and Vanuatu.
6. Reporting and Validation
DELIVERABLES AND PAYMENT SCHEDULE
Deliverable
Timeline
Payment (% of Total)
Inception Report and Work Plan
July 30, 2025
15%
Interim Report on Stakeholder Engagement
August 30, 2025
20%
Draft Scoping Study Report
September 30, 2025
30%
Validation Workshop and Revised Report
October 30, 2025
20%
Final Scoping Study Report
November 30, 2025
15%
INSTITUTIONAL ARRANGEMENT
The Consultant will operate under the guidance of the GGGI Senior Economist, who will act as the primary focal point for this assignment. The Consultant will collaborate closely with the GPFS program team to align the programโs objectives and priorities. Regular progress updates will be conducted through meetings, where the Consultant will provide detailed reports on the status of activities, challenges encountered, and proposed solutions.
GGGI will facilitate introductions to key stakeholders and relevant governmental and non-governmental entities. The Consultant will also have access to background documents, relevant research, and other resources required to complete the assignment effectively. The Consultant will submit all deliverables on time and incorporate feedback from GGGI and stakeholders to finalise the assignment's outputs.
EXPERTISE REQUIRED
The description of the required expert may be split into the following parts:
Advanced degree in Economics, Finance, Climate Policy, or a related field. At least 5-8 years of experience in disaster risk finance, parametric insurance, or climate resilience. Demonstrated expertise in conducting scoping studies and comparative analyses. Strong stakeholder engagement and facilitation skills. Knowledge of climate finance in Small Island Developing States (SIDS) is highly desirable. Excellent written and verbal communication skills in English.
ADMINISTRATIVE INFORMATION
The closing date is 17 June 2025 at 11:59 PM Korean Standard Time (KST). Applications submitted after the deadline will not be considered.
The application, Cover Letter, and CV must be sent in English.