Photo credit: Baochinhphu.vn
By Joanna Hausen, MIPP
There are inevitable risks facing countries due to climate change, and some risks will continue impacting communities despite preventative and mitigative measures or future improvements in policy and technology. Viet Nam is forecasted to face some of the most increased coastal risks in the world and a significant portion of its cities – where population and economic assets are concentrated, as well as rural communities and agricultural assets – are in low-lying coastal and deltaic regions. The cover image for this blog illustrates one of the worst-hit areas of Quang Binh province after the central region of Viet Nam had historically high levels of flooding in 2020. These hazard-prone regions have experienced reoccurring weather events, which over time has diminished the disaster and socio-economic resilience of many communities, especially when there is no protection of losses through risk transfer mechanisms like disaster risk insurance and other risk financing tools.
There is a significant protection gap for losses around the world, in developed countries over 40% of direct losses from natural hazards leading to disaster are insured, whereas less than 10% are covered in middle-income countries, and below 5% in low-income countries. In Viet Nam, there have been strides in disaster risk management and many components of an effective package are being employed – still there remains a major protection gap for risk transfer mechanisms and financing to respond to the inevitable risks facing communities and their livelihoods. A more enabling environment for disaster risk insurance could allow for effective risk transfer that mitigates future losses.
Disaster risk resilience calls for prospective financing for risks and rapid financing in aftermaths to uphold human security. In Viet Nam, thus far the policies, programs and products for disaster risk insurance have been inadequate due to a series of limitations. At a participant level, programs have lacked public awareness, locally specific product designs, and efficient dispersal which builds trust in insurance. At an implementation level, there were human capacity issues due to a lack of formal insurance training or certifications available in the country. There was also low participation in the planning stages with relevant stakeholders which resulted in an uncoordinated sector. And at a legislative level, conflicting legislation has made it more difficult for non-governmental actors to develop domestic and international insurance solutions for disasters. The gaps offer a valuable overview of successes and lessons learned that can inform an adaptive approach to improving future efforts at participant, implementation, and legislative levels.
Much of the success of various components in Viet Nam’s disaster risk management plan can be attributed to the coordination of the Viet Nam Disaster Management Authority, which has regularly collaborated with the Global Climate Fund and UNDP Project ‘Improving the Resilience of Vulnerable Coastal Communities to Climate Change Related Impacts’. Their shared activities have contributed to the building blocks for a more comprehensive strategy on insurance, such as gathering up-to-date data about disaster risks and needs specifically about insurance and financing informed by differing communities, provinces, and demographics. These assessments considered the gender and socio-economic context to understand the differing barriers which will help inform inclusive solutions Going forward, actors in the space hope to unify their vision toward the continued prioritization of diverse needs assessment, capacity development of the sector, stakeholder participation, co-operation between actors domestically and internationally, and a more enabling legislative environment.
In my work with the GCF Project, I have been supporting activities that focus on the protection gap in Viet Nam, which will inform project activities, support legislative recommendations, and information sharing for cooperating actors. I was able to join the work on disaster risk insurance at an interesting time of the project as new opportunities continue to be integrated into existing and new initiatives. Just in September 2021, UNDP announced the Insurance and Risk Finance Facility within its Finance Sector Hub which Viet Nam is one of the first ten counties to be chosen to participate. Spurred from these recent events, the GCF Project organized the first workshop for a national diagnostic study on insurance and I was able to hop on this work, with one of my first assignments being to support the diagnostic study and the second workshop being organized. Coming out of the recent COP 26 UN Climate Change Conference in November 2021, further funding and shared commitments for disaster risk insurance were announced that the GCF Project must now take into consideration. Being involved in this portfolio of work has been an exciting opportunity to glance into how the GCF Project is evolving and adapts to new information and opportunities to achieve shared goals of improving coastal resilience.