The Maldives Monetary Authority (MMA) has signed a financing agreement with the United Nations Development Programme (UNDP) to begin collaboration on the joint Maldives Insurance Development Project.
The agreement outlines the partnership between UNDP and MMA to develop the capacity of the insurance industry in the Maldives focusing on two key aspects; insurance regulation and insurance operations. The project has been formulated based on the findings of the Insurance Sector Diagnostic Study completed in January 2023, with the support of UNDP’s corporate offer on insurance; the Insurance and Risk Financing Facility (IRFF), and in alignment with the Integrated National Financing Framework (INFF) of the Maldives.
The objectives of the project are to develop the actuarial and operations capacity of the insurance industry in the Maldives, to ascertain the feasibility of nature-based insurance products in the country, and to develop key regulations.
“By strengthening the regulatory framework and enhancing operational capabilities, we are not only fortifying stability in our financial landscape, but also fostering resilience against the unique challenges inherent in our environment,” said Ali Hashim, the Governor of MMA.
The Maldives identified nine practical actions specifically related to the development of the insurance sector in its INFF. This project will serve as a necessary precursor to achieve these commitments. These commitments include accelerating the introduction of services that are becoming increasingly essential for the country, such as green, blue and climate insurance products.
Green insurance, after a covered loss, pays for the use of environmentally friendly or more energy-efficient materials when making repairs and may offer discounted insurance premiums to policyholders who are already green. Blue plans can provide health expense coverage to low-income populations, those in a certain age group and disabled individuals. Meanwhile climate insurance would seek to improve protection against climate-related loss and damages, strengthening financial resilience against the negative impacts of climate change.
UNDP Resident Representative in the Maldives, Enrico Gaveglia, said, “The economic cost of climate change is increasing alarmingly and unpredictably. Insurance is an effective adaptation measure that can be leveraged as a new financing tool to protect vulnerable communities and investments.”
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