Farmers, fishers, MSMEs, and other climate-vulnerable groups in Samoa now have access to an innovative micro-insurance product, designed to protect them against the adverse impacts of tropical cyclones.

This is after the UN Capital Development Fund (UNCDF) in partnership with local insurer, Samoa Surety Insurance, launched a climate and disaster risk parametric micro-insurance product in the country. This is now the fourth to exist in the Pacific region, besides Fiji, Vanuatu, and Tonga to have such a scheme.

The product which was developed by the Pacific Insurance and Climate Adaptation Programme (PICAP), will be piloted in Samoa over the next 12 months.

By providing quick access to payouts within 10-14 days following a Tropical Cyclone, Samoa’s climate-vulnerable communities will have at their disposal a financial tool that will help them cope better and recover faster from such events.

While launching the product in Apia, the Minister of Agriculture and Fisheries, Hon. Laauli Leuatea Polataivao Fosi, said: “The Ministry of Agriculture and Fisheries team has had consultative meetings with the PICAP team and Samoa Surety, and we are confident that this product is going to be a key tool in the basket of targeted financial solutions Samoa is providing to reduce the impact of extreme weather events on our most vulnerable communities.”

The product comes in two variants, offering covers of WST$1000 and WST$2000 respectively against cyclonic winds, with premiums capped at 7% per annum of the sum insured.

Funds will be sent directly to either the bank accounts of policyholders or their mobile wallets when a ‘trigger event’ – such as a particular category of cyclone – is met, with no need to verify loss and damage.

The New Zealand High Commissioner to Samoa, His Excellency, Trevor Matheson, said: “It is encouraging to note that digital solutions will play a significant role in the product rollout. The use of Digicel and Vodafone mobile money wallets and internet banking will facilitate the collection of premiums and the disbursement of payments following an extreme weather event.”

Samoa, categorized as a medium-risk country by the World Risk Index Report, with limited coping capacities, is highly vulnerable to natural hazards and the product is designed to help soften the blow of Tropical Cyclones on the most vulnerable.

This product responds to a market gap and a persistent development challenge - the non-availability of financial instruments in the immediate aftermath of a natural calamity for low-income households, small-holder farmers, fishers, MSMEs and persons with disabilities in Samoa.

UNCDF’s Regional Technical Specialist, Mr. Praneel Pritesh, said: “A demand and supply survey we conducted revealed a clear need and demand for financial tools to help Samoans recover from disasters. Following a disaster, 75% of the 437 respondents utilized their savings, 20% took out loans, and many relied on remittances. These coping mechanisms strain their finances, affecting other household priorities such as education and entrepreneurship,”

“As PICAP continues to expand, we are committed to developing, testing, and deploying frontier insurance solutions for vulnerable segments such as women, youth, and MSMEs that can further help build the financial resilience of Pacific Islanders, including Samoans against natural hazards.”

The Australian High Commissioner to Samoa, Her Excellency, Emily Luck, said: “we have been following this early roll-out in the Programme for some time now in Fiji, Tonga and Vanuatu with enthusiasm and we have been eager to see it expand to Samoa,”

“The Programme is supporting Pacific-led innovations tailored to the specific country needs, helping over 1000 individuals rapidly recover from cyclones and excess rainfall, which are increasingly frequent due to climate change.”

PICAP has brought together an ecosystem of public, private and NGO/CSO stakeholders and local communities in the country to ensure everything from customer onboarding and awareness to regulatory compliance is addressed comprehensively.

The Programme is jointly implemented by UNCDF, the UN University Institute for Environment and Human Security (UNU-EHS) and the UN Development Programme (UNDP) and is funded by the Governments of New Zealand, Australia and the United Kingdom.

The British High Commissioner to Samoa, His Excellency, Gareth Hoar, said: “This initiative exemplifies the pivotal role of public-private partnerships in achieving the Sustainable Development Goals (SDGs). The launch of this parametric insurance product is not just a celebration of innovation but also a step forward in bridging the financial protection gap for climate-vulnerable communities in Samoa and the wider Pacific region.”

During the pilot phase, the underwriters, Samoa Surety Insurance, will aim to sign up around 200 beneficiaries, before the start of the cyclone season in November and will look to scale up next year, to make the product available to more people.

“The product is a game-changer and a crucial enhancement to our offerings, providing Samoans with some form of protection against natural disasters that are becoming more frequent and severe with Climate Change,” said the General Manager for Samoa Surety Insurance, Mr. Peter McPherson.

He adds, “Samoa Surety Insurance will work closely with and consult local communities, particularly those who belong to vulnerable groups to build awareness about the product. The objective is to educate them about parametric insurance, as well as financial and insurance literacy so they can reap the benefits of the product.”

In Samoa where insurance coverage is fairly low, the innovative financial solution paired with financial literacy efforts will not only enhance Samoa's resilience but also holds the potential to significantly boost insurance uptake across the country.

The Deputy Governor of the Central Bank of Samoa, Mr. Gilbert Wongsin said: “This new financial product resonates well with the financial inclusion mandate of the Central Bank of Samoa and achieves one of the goals of the national financial inclusion strategy of providing client centric products, ensuring Samoan citizens, especially the underserved adult population, farmers and MSMEs, have access to appropriate financial services.”

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About UNCDF:
The UN Capital Development Fund (UNCDF) is the United Nations' flagship catalytic financing entity for the world’s 46 Least Developed Countries (LDCs). With its unique capital mandate and focus on the LDCs, UNCDF works to invest and catalyse capital to support these countries in achieving the sustainable growth and inclusiveness envisioned by the 2030 Agenda for Sustainable Development and the Doha Programme of Action for the least developed countries, 2022–2031.For more information visit https://www.uncdf.org

About Samoa Surety Insurance:
Samoa Surety Insurance (SSI) offers Samoans market-leading competitive insurance for Motor Vehicles, Domestic and Commercial Insurance. With our passion for innovation and modern thinking, we are creating a new fresh and simplified approach to insurance in Samoa.