A local insurance company has become a pioneer in the region with the launch of a climate funding scheme that allows vulnerable communities to access funds before disaster strikes.

Samoa Surety Insurance and the United Nations unveiled a groundbreaking bundled insurance product on 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.

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.

Minister of Natural Resources and Environment Toeolesulusulu Cedric Schuster in his keynote address said the product empowered communities, allowing them to act ahead of time to protect their homes, their livelihoods, and their families. I

“This product is part of our broader vision to promote climate resilience across Samoa. We understand that addressing climate change requires a multi-faceted approach. It requires collaboration between the public and private sectors, partnerships with international organisations, and the active involvement of the communities themselves,” he said.

“We are proud to be part of this collective effort, to build a climate-resilient Samoa that can not only withstand climate impacts but also thrive in the face of them.

“Access to insurance products, such as the Micro Climate Change Insurance, will help reduce the vulnerability of marginalised and underserved populations, ensuring that they are not left behind in the fight against climate change. With the support of UNCDF and the Pacific Climate Change Centre (PCCC) and SPREP, Samoa Surety Insurance aims to expand the reach of these products across Samoa, ensuring that every community, especially those most at risk, benefits from the protection they deserve.”

Samoa Surety managing director John Low said this was the integration of their bundled indemnity insurance alongside their parametric coverage.

“This is the first solution of its kind in the Pacific, designed specifically to offer vulnerable families greater financial security in times of crisis. The bundled indemnity insurance will provide essential protection, including funeral coverage, term life insurance, personal accident insurance, and house fire insurance,” he said.

“By incorporating these components, we are ensuring that individuals and families are not left struggling in the aftermath of adversities. Whether it is rebuilding homes, covering emergency expenses, or providing financial relief to families coping with the loss of a loved one, this holistic risk management solution offers a crucial layer of resilience and stability for those who need it most.”

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 implentation 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.