Amidst increasing climate-related risks and growing investment needs, insurance is critical to supporting economic resilience and unlocking much-needed finance in emerging markets and developing economies (EMDEs).    

Climate-related insurance coverage for physical assets ensures reconstruction in the event of climate-induced or accelerated hazards, such as cyclones, flooding, and drought. This protection is needed across the spectrum, from smallholder farms to major infrastructure assets. However, insurance products protecting physical assets from climate risks remain limited, and coverage for financial risks remains largely underdeveloped in EMDEs.  

Leveraging PDBs to overcome structural barriers  

Public Development Banks (PDBs) are uniquely positioned to bridge this gap by co-developing and scaling products that help overcome structural and market barriers to insurance access. While these banks can’t underwrite insurance products directly, they can act as partners and intermediaries for private insurers, facilitating the deployment and co-development of innovative insurance solutions and integrating them into their own operations. 

This report explores the different types of partnerships that PDBs can pursue with private insurers to increase coverage that supports climate goals in EMDEs. Broadly, these partnerships include co-developing insurance solutions, bundling insurance with other financial instruments, providing technical assistance and capacity-building support, and knowledge-sharing initiatives.  

The study highlights the distinct, complementary roles of these institutions: 

• National Development Banks (NDBs): Leverage their domestic mandates to foster local market development and create context-specific insurance solutions. 

• Regional Development Banks (RDBs): Harmonize regional efforts by improving data availability, coordinating regulations, and facilitating risk pooling across borders. 

• Multilateral Development Banks (MDBs): Provide global scale through catalytic capital, credit enhancements, and international risk transfer mechanisms to mature emerging insurance markets. 

This paper also examines how National and Regional Development Banks (NDBs and RDBs) can strengthen their capacity to leverage insurance instruments, while acknowledging the complementary financial and technical support provided by Multilateral Development Banks (MDBs). 

Expanding insurance solutions in EMDEs requires more than innovative products; it requires a coordinated ecosystem. By synchronizing efforts amongst governments, regulators, and credit agencies; PDBs and their partners can bridge the protection gap and establish a foundation for long-term, scalable climate resilience.  

Download the report for in-depth analysis and actionable recommendations on how PDBs can bridge the insurance gap in EMDEs.

Download report