Participating in World Bank’s Pandemic Emergency Financing Facility
Sompo Japan Nipponkoa participated in the World Bank’s Pandemic*1 Emergency Financing Facility in June 2017.
The Government of Japan took up the issue of international health as host country for the G7 Ise-Shima Summit in May 2016, and the World Bank cooperated with the World Health Organization to establish this facility as a new financing mechanism to respond to public health threats, based on lessons learned from the 2014 Ebola virus epidemic in West Africa. Besides avoiding the spread of infectious diseases in developing countries, the aim is to mitigate human and economic losses and then to support a speedy recovery when a serious epidemic occurs, by providing emergency response funding to the target countries and aid organizations.
The facility will make pay-outs in the event of an outbreak of a pandemic of a certain scale, funded through derivative transactions with the International Bank for Reconstruction and Development (World Bank Group) or the purchase of catastrophe bonds issued by it. Because the size of pay-outs is determined by objective measures such as the number of cases and deaths, there is no requirement to have damage assessments, and this makes it possible for the recipients to receive pay-outs quickly. Funds equivalent to insurance premiums under this system are covered by donor organizations, including the Government of Japan.
- Term: Three years starting July 7, 2017
- Coverage: $425 million*2 (approximately 47 billion yen)
- Covered perils: Pandemic risks from new influenza strains, Coronavirus, etc.
- Underwriting: Derivatives or catastrophe bonds
- Parties covered: Developing countries (77 countries*3), aid organizations including civil society organizations
Using its cumulative experience and knowhow as an insurance company, Sompo Japan Nipponkoa is contributing to solutions for social issues and working to ensure healthy lives and promote wellbeing in developing countries, by participating in the world’s first system to address epidemic and pandemic risk through insurance and capital markets.
- A pandemic occurs when an infectious disease (especially in the case of an epidemic) spreads across a large region and is expected to have significant infection and mortality impacts.
- The World Bank has secured over $500 million in funding, including funds other than the insurance window.
- The facility targets countries that are eligible for loans from the International Development Association (World Bank Group).
Providing Micro-Insurance in India
― Contributing to Independence of Economically Vulnerable Sections of Society
In 2008, Universal Sompo General Insurance (USGI), Sompo Japan Nipponkoa’s subsidiary in India, started to offer micro-insurance services for the protection of low-income individuals who are vulnerable to health risks and have difficulties repaying their loans.
USGI’s products include livestock insurance for economically marginalized farmers, insurance packages and accident insurance for farmers, and medical insurance coupled with microfinance offered by banks and other financial institutions covering five major illnesses. These insurance product’s premiums are set low.
In order to support independence, poverty reduction and the sustainable development of the country, USGI is thus striving to spread insurance as one of basic social security services among the economically vulnerable sections of society in India, where social divisions are large.
Invigorating Regional Economies through Local Partnerships
To promote community development in ways that increase self-reliance and sustainability based on local strengths, Sompo Japan Nipponkoa works through public-private partnerships with local governments to address issues specific to each region. Numerous and wide-ranging, these partnerships include disaster resilience, traffic safety, corporate risk consulting, gender equality in the workplace, environmental conservation, tourism industry support and tourism promotion, and collaboration with arts and cultural facilities. We also promote employee participation in community development by offering food menus and hosting vendor booths featuring local products in company cafeterias. We also support purchases of local products via the Internet and other means.
Sompo Japan Nipponkoa Himawari Life has signed a Partnership Agreement to Promote Healthy Lifestyles for Citizens of Osaka Prefecture and is working with the Osaka prefectural government on its implementation. Also, the company is participating in the Aizuwakamatsu Smart Wellness City IoT* Healthcare Platform Project by the Aizuwakamatsu IoT Healthcare Consortium (represented by Hondaya Honten Inc.) as a partner company. This project is supported by the Project for IoT Services Creation under the Japan’s Ministry of Internal Affairs and Communications.
Investment in Japan’s First Social Bonds (JICA Bonds)
Sompo Japan Nipponkoa has invested in JICA Bonds issued by the Japan International Cooperation Agency, the first social impact bonds in Japan. Intended for the purpose of making social contributions, the bonds are issued as a means of procuring funds for assistance to developing countries and solutions to global issues. Our investment decision was made based on the fact that the Japanese government had declared the mobilization of private sector funding for developing countries through the JICA bonds to be one of its concrete actions to achieve the SDGs*, and also that the investment would match our Group Management Philosophy of contributing to society through business.
- Sustainable Development Goals: Goals on themes adopted by the United Nations to be achieved by 2030 by initiatives of the international community. The SDGs consist of 17 goals and 169 targets which cover climate change, natural resources, energy, urban issues, and inequality within and among countries, among others.