Samoa Surety Insurance and the United Nations will unveil a groundbreaking bundled insurance product this Friday designed to safeguard low-income households in Samoa from the financial impacts of extreme climate events and other risks.

The product was developed through close consultation with local farming communities, fishers, micro-businesses and informal sector workers, whose livelihoods face growing threats from the devastating effects of tropical cyclones, floods, droughts, and earthquakes.

Samoa's Minister of Natural Resources and Environment Toeolesulusulu Cedric Schuster, will deliver the keynote address at the event.

He will be joined by Kamal Kishore, the Special Representative of the UN Secretary-General for Disaster Risk Reduction and Head of the UN Office for Disaster Risk Reduction, who is visiting the country from Geneva.

The product covers multiple perils including cyclones, earthquakes, excess rainfall and water deficit/drought, alongside additional indemnity benefits including funeral, term life, personal accident, house fire, and hospital stays.

John Low, the Managing Director of the locally-owned Samoa Surety Insurance (SSI) said: "We worked hand-in-hand with the UN and closely consulted with local communities to redesign this product to reflect the aspirations and needs of our people on the frontlines of climate change.

"The result is a rare insurance offering, blending protection against climate disasters with coverage for life’s other risks. It’s perfectly timed for our climate-vulnerable communities and provides them with a financial buffer against extreme weather and has the potential to be transformative for insurance across Samoa and the Pacific region."

The policy introduces a pioneering parametric scheme for the climatic shocks component of the product. Under the scheme, payouts are triggered by pre-determined disaster events such as cyclones, excess rainfall, droughts, or earthquakes, rather than actual losses.

Unlike traditional insurance, this approach requires no loss verification, and ensures swift financial assistance reaches affected communities in the immediate aftermath of a disaster event.

Only 9.8% of Samoans have any type of insurance, which creates a significant financial protection gap between which losses are insured and which are not.

Natural hazards wreak havoc on homes and farms, disrupt livelihoods, and increase costs as communities scramble to secure food and other essentials. Without adequate insurance, affected households are forced to dip into savings or take out costly loans, actions that risk driving them deeper into poverty.

A survey conducted by the UN Capital Development Fund (UNCDF), UN Development Programme and UN University Institute for Environment and Human Security found that there was a strong demand for climate and disaster risk financing instruments, especially in the agriculture sector.

A significant 99.7% of respondents expressed a willingness to pay for insurance that provides financial protection against climate shocks to help cushion the potentially devastating impact of such events.

The results of the survey informed product design and implementation through the Pacific Insurance and Climate Adaptation Programme, an initiative supported by the Governments of Australia, New Zealand and the United Kingdom.  

Alongside the bundled insurance policy, a pilot anticipatory action product tied to parametric insurance will also be launched, a fresh and proactive approach to protecting Samoan communities.

This innovative scheme, developed by SSI, UNCDF, and the UNDRR, pays out a portion of the total sum insured 24-48 hours before a disaster strikes, based on early warning triggers that are determined in advance.

The advance payments support communities to fund preparedness measures before a disaster strikes, leaving them in a stronger position to bounce back quicker.