David Howden calls on private sector to act to make vulnerable countries more investible

In a keynote speech on the Island of Hope (in the Innovation Zone) at COP28 in the UAE, David Howden, founder and CEO of global insurance broker Howden, discussed the power of the private sector to protect vulnerable countries against the impacts of climate change and unlock investment in their future.

Howden highlighted the belief that the climate risks for vulnerable countries in the Global South are uninsurable.

“The problem isn’t that they’re uninsurable, it’s that there has been nobody to pay the premium at the scale required. However, the Loss and Damage fund has the power to change that,” said Howden.

On the opening day of COP28, summit President Dr. Sultan Al Jaber revealed that the loss and damage fund became operational.

It aims to provide financial assistance to countries at extreme risk from climate change, and to support climate change mitigation and recovery.

Howden spoke about how earlier this year while reflecting on COP27, he questioned whether anyone actually modelled the risks of these countries and calculated how much is needed to protect them.

“Remarkably, the answer was ‘no’. So, we asked Cambridge University to gather together the people to do this. What was different about their research was that it looked at losses as a percentage of GDP. The reason this is so important is because it shifts the focus to protecting countries not buildings,” he explained.

The research and subsequent report warns that most vulnerable countries could lose over 100% of GDP in 2024 from climate related disasters that are insurable.

The report, which models Loss and Damage implementation, revealed these risks are insurable and proposes a solution using the power of re/insurance and capital markets to dramatically scale up the impact of funding.

“By understanding the risk to the entire economy, we were able to calculate what it would cost to put in place a contractual guarantee to pre-agreed finance. This provides both the funding needed to respond to a disaster and the certainty that these economies aren’t going to be wiped out.

“These are two sides of a very powerful coin: guaranteed, pre-agreed finance to respond when a disaster hits – or indeed even before – and the certainty needed to make vulnerable countries more investable, making this model the most economically powerful way to use donor money,” said Howden.

In closing his speech, Howden emphasised a desire to work with climate vulnerable countries to build this into a reality, and called on the private sector to get behind this as a crucial mechanism to have in place to make these countries more investable.

However, to get this off the ground, Howden noted the need for support from donor countries.

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