Background

Contractors tendering for Pacific Region Infrastructure Facility (PRIF) partner projects in the Pacific Island countries (PICs) are struggling to access the insurances and related risk engineering services required to deliver quality construction infrastructure projects funded by donors. Particularly for the smaller countries and smaller projects a sustainable local insurance solution is likely to become more challenging. The continued, gradual, reduction of local construction insurance capacity from the region is mainly due to relatively high project costs as well as the vulnerability of many of the countries, particularly with respect to the exposure to climate change and natural hazard risks.

In August 2024, ADB, in cooperation with the World Bank, published “A Guide to Insurable Infrastructure in the Pacific”. The Guide discusses the challenges in accessing the insurance market in the Pacific and advocates proactive measures to mitigate risks and enhance project viability, from early engagement with insurers to incorporating risk reduction and de-risking measures throughout the project lifecycle. Recognizing the role of insurance in infrastructure development, the Guide suggests empowering project stakeholders with the requisite tools and knowledge to navigate the insurance landscape effectively.

A series of recommendations in this Guide include consideration of appropriate risk modeling, risk reduction measures, implementation of risk management good practices, improvement of procurement procedures and the use of simplified and standardized policy forms and documentation. Integrating early identification, evaluation, and mitigation of the project’s risks and impacts should become a standardized part of digitally supported project preparation tool, such as SOURCE, a multilateral digital project preparation platform promoted by the G20 Infrastructure Working Group.

Objectives

The event brought together a wide range of stakeholders, including representatives from the other 13 Pacific Island Countries (PICs), the New Zealand Ministry of Foreign Affairs and Trade, the Australian Department of Foreign Affairs and Trade, the United Nations Office for the Coordination of Humanitarian Affairs, the Global Shield against Climate Risks, the Pacific Regional Infrastructure Facility (PRIF), and the Sustainable Infrastructure Foundation (SIF). Also participating were members of the Insurance Development Forum, such as WTW, Zurich Insurance Group and Aon, as well as other local insurance brokers like McLarens, Insurance Holdings Pacific, and the Pacific Catastrophe Risk Insurance Company (PCRIC). Key discussions focused on actionable solutions to enhance risk management and improve access to insurance for infrastructure projects in the Pacific. Topics included integrating the insurance industry early in project planning, creating a regional infrastructure insurance facility, and leveraging SOURCE.