Luxembourg-EIB Climate Finance Platform supports BlueOrchard’s climate insurance equity fund with the backing of the government of Luxembourg

This article is published in association with European Investment Bank.

The Luxembourg-EIB Climate Finance Platform (LCFP) will provide EUR 5 million for impact investor BlueOrchard’s innovative USD 100 million climate insurance fund, with the backing of the government of Luxembourg.

The LCFP seeks to catalyse private and public sector investment into high-impact companies in emerging markets involved in insuring climate change mitigation and adaptation projects, including projects addressing losses and damages caused by climate change.

Gilles Roth, Luxembourg Minister of Finance said: “Protecting communities from the social and economic impact of climate change is crucial and can be enhanced through climate insurance and better understanding of the local impact of extreme and more uncertain weather. Luxembourg is pleased to support the new BlueOrchard Insurance resilience fund as part of our impact focused climate cooperation with the European Investment Bank. This cooperation demonstrates how private and public finance, climate expertise and climate insurance can mitigate the impact of climate change on vulnerable regions.”

Serge Wilmes, Luxembourg Minister of the Environment, Climate and Biodiversity said “Luxembourg is committed to climate action and is pleased to support improved access to climate insurance to effectively protect vulnerable communities in developing countries from losses and damages caused by climate change, including extreme weather events and slow onset events. Unlocking private and public investment is critical to tackling the climate crisis in developing countries. The new support for the BlueOrchard InsuResilience Fund II by the Luxembourg-EIB Climate Finance Platform will help vulnerable communities to be better prepared for climate risks and recover more quickly from climate disasters.”

The BlueOrchard managed InsuResilience Investment Fund Private Equity II (IIF II) will contribute to increasing access to affordable insurance and expanding the provision of climate insurance by providing equity investments in fast-growing companies that provide and support climate insurance, including insurance technology providers and specialist insurance companies and brokers.

New investment backed by the BlueOrchard managed InsuResilience Investment Fund Private Equity II will help to enhancing climate resilience in Asia, Africa, and Latin America by providing coverage against unavoidable climate related losses and damages in developing countries, including extreme weather events and slow onset events. By doing so it effectively offers an effective means to reduce financial risks and ensure rapid recovery following extreme weather events.

“The European Investment Bank is committed to fostering climate resilience around the world and our latest collaboration with BlueOrchard will help to address barriers holding back access to climate insurance in countries most impacted by climate change. Investing in adaptation and resilience is not only a necessity but a strategic imperative for the insurance industry in the face of climate change. The InsuResilience Investment Fund II will support equity investments in climate insurance technology, to empower insurers to better manage climate risks and better protect vulnerable communities across Asia, Africa, and Latin America from extreme weather events and climate change.” said Ambroise Fayolle, Vice President.

“Our latest partnership with the EIB reflects our shared dedication to building resilience against the consequences of climate change and supporting the most vulnerable regions and households. The InsuResilience Investment Fund Private Equity II will drive high-impact equity investments to enable companies to harness technological innovation and improve access to affordable climate insurance solutions.” said Philipp Mueller, Chief Executive Officer of BlueOrchard.

Overcoming barriers to climate insurance in developing countries

Specialist investment is a critical component in providing insurers with the necessary climate data and expertise to encourage risk-reducing activities. The InsuResilience Investment Fund Private Equity II aims to enable more resilient communities by directly investing in expanding resilience insurance, covering agricultural and natural catastrophe risks.

Currently, many vulnerable communities and economic activities in climate change-affected countries remain uninsured, highlighting the need for greater industry involvement. The insurance industry is uniquely positioned to support and reward investment in climate adaptation and resilience, it therefore plays a pivotal role in transferring risk and providing rapid recovery funding for households, businesses, and communities after disasters.

Unlocking investment to improve climate monitoring technology will help insurance companies to better understand what can go wrong before a disaster occurs aided by insurance industry best practice expertise, analytics, and risk modelling. The fund will also help to drive sustainable development by speeding up recovery, encouraging financial inclusion, and freeing up capital to invest in crucial areas from a family’s financial security to vital healthcare and education. Perhaps most importantly, we are helping to transfer risk away from families, businesses, and countries, through a variety of insurance products and tools.

Yet lack of insurance can tip hundreds of thousands of people into poverty as disasters strike given that many people living in developing countries have little or no means to recover and rebuild. 

Additional equity capital provided by InsuResilience Investment Fund II will strengthen capabilities along the insurance value chain to better cover weather-related losses through improved access to climate data, expertise, and distribution, allowing stakeholders to manage climate risk effectively and on a commercial basis. This will facilitate improved coverage of losses and expand climate insurance to farmers and communities in Asia, Africa, and Latin America.

The cooperation between the EIB, BlueOrchard, and the Government of Luxembourg follows the successful deployment of the predecessor strategy, the InsuResilience Investment Fund.

To date, the predecessor fund has made 9 investments across emerging markets, reaching nearly 58 million beneficiaries in underserved and economically vulnerable communities to mitigate the effects of climate change (as of Q3 2023) with the objective to reach 70-110 million beneficiaries by 2025.

Background information

European Investment Bank

The EIB is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.

EIB Global is the EIB Group’s specialised arm dedicated to increasing the impact of international partnerships and development finance.  EIB Global is designed to foster strong, focused partnership within Team Europe, alongside fellow development finance institutions, and civil society. EIB Global brings the Group closer to local people, companies and institutions through our offices across the world. 

BlueOrchard

BlueOrchard is a leading global impact investment manager and member of the Schroders Group. As a pioneering impact investor, the firm is dedicated to generating lasting positive impact for communities and the environment, while aiming at providing attractive returns to investors. BlueOrchard was founded in 2001, by initiative of the UN, as the first commercial manager of microfinance debt investments worldwide. Today, the firm offers impact investment solutions across asset classes, connecting millions of entrepreneurs in emerging and frontier markets with investors with the aim to make impact investment solutions accessible to all and to advance the conscious use of capital. Being a professional investment manager and expert in innovative blended finance mandates, BlueOrchard has a sophisticated international investor base and is a trusted partner of leading global development finance institutions. To date, BlueOrchard has invested over USD 10bn across more than 100 countries. BlueOrchard has facilitated access to financial and related services to over 280 million people in emerging and frontier markets as of December 2022.

For additional information, please visit: www.blueorchard.com.

Luxembourg-EIB Climate Finance Platform (LCFP)

The LCFP is a de-risking platform initiated by the Government of Luxembourg in collaboration with the EIB that seeks to catalyze private sector investments into high-impact climate projects in developing countries.

For additional information, please visit: www.blueorchard.com.