A new partnership between the Asian Development Bank, the UN Capital Development Fund and the UN Development Programme (UNDP) will design and seed an insurance market for micro, small and medium enterprises in Fiji. The programme will roll out climate index products that pay quickly when a cyclone or heavy rain reaches a pre-set trigger. The approach gets cash to firms fast so they can repair, restock and keep staff on the payroll.
Parametric insurance is a form of index based cover that pays out when pre agreed trigger conditions are met, such as rainfall thresholds or wind speeds. The rules are simple and pre approved and there is no need to prove actual losses. This helps insulate vulnerable communities from climate hazards by providing fast and pre defined payouts that keep cash flowing when it matters most.
Micro, small and medium sized enterprises account for more than eighty per cent of Fijian businesses and employ more than a quarter of the workforce, according to the Fiji Bureau of Statistics. The sector is highly exposed to cyclones and floods, yet most firms have limited access to insurance that is tailored to their risks and designed to support recovery and long term resilience.
The initiative builds on the Pacific Insurance and Climate Adaptation Programme that piloted products in Fiji in 2021 with Reserve Bank approval. Outreach has grown, with more than one thousand policyholders receiving payouts following trigger events over 2024 and 2025. Officials argue that financial resilience is now a frontline development need as storms intensify and supply chains become more fragile.
Proponents say the model is simple. A small premium buys a right to a fixed payment if wind speed or rainfall crosses a threshold measured by independent data. There is no claims adjuster and no dispute over damage estimates. Critics note that basis risk remains and that education is needed so firms understand what is and is not covered. The designers say they will pair products with training, savings and advisory services. As coverage deepens, banks may lend more confidently to small firms in hazard-exposed areas because they know a payout will support loan servicing after a shock.
