Fund Resilience, Not Disasters: Why risk reduction is the future of insurability

Every year, disasters are becoming more frequent, more costly, and more devastating. Their global economic costs already reach over $200 billion annually. Yet according to the UN, the true figure, including lost livelihoods, eroded development, and spiralling debt, stands closer to $2.3 trillion. Without decisive action, this trend threatens the very foundation of economic stability and social progress.

That's why this year's International Day for Disaster Risk Reduction (IDDRR) carries such a vital message: Fund Resilience, Not Disasters.

For the Insurance Development Forum (IDF), this is not just a call to action; it's at the heart of our work to build future-ready nations.

Why DRR matters for insurability

The IDF believes that investing in disaster risk reduction (DRR) is fundamental to keeping risks insurable in the long run. Without it, insurance will become increasingly unaffordable and unattainable, not only for individuals, communities, and governments, but also for the large-scale infrastructure projects on which future prosperity depends.

In other words: risk reduction is a foundation of insurability.

Insurance thrives on managing uncertainty. But if climate and disaster risks grow unchecked, the industry will face a future where losses outweigh capacity, leaving societies more vulnerable. That's why the IDF DRR Working Group is working to ensure disaster risks remain financeable, bankable, and ultimately insurable.

What we're doing: Turning risk into resilience

Through the DRR Working Group, the IDF brings together public and private partners to reduce disaster risk at every level, local, national and global. Current initiatives include:

• Launch of the Infrastructure Resilience Development Fund for resilient infrastructure projects in emerging and developing economies: We are mobilising insurance sector investment in resilient infrastructure, designed to strengthen vulnerable communities in emerging and developing economies against climate change and natural disaster risks. Over the past year, the IDF Infrastructure Working Group has created a blueprint to catalyse insurance sector capital into this underserved segment of the infrastructure market. The framework aims to develop a pipeline of projects tailored to insurance investment requirements, aligning closely with the IDF's mission to leverage insurance and risk management expertise to enhance global resilience. Importantly, the fund's first close is imminent, marking a significant step toward turning this blueprint into action.
• Launch of the IDF-ADB Insurable Infrastructure Initiative: With the Asian Development Bank, we're working on developing a regional strategy for infrastructure insurability in the Pacific. This includes risk advisory services, scenario planning for hazards like tropical cyclones, and the development of practical recommendations on resilient infrastructure investments. These efforts are designed to help governments and Development Finance Institutions build adaptation projects that are both bankable and insurable.
• Advocating DRR integration across the insurance industry: The IDF promotes and disseminates good practices on how insurers can embed disaster risk reduction into their products and services. This includes the development of a framework of seven practical mechanisms insurance companies can use to incentivise and reward risk reduction, such as variable pricing, prerequisites for coverage, and investing in risk reduction measures. Through initiatives like the Resilience Hub, the IDF helps insurers share insights and turn DRR into tangible business practices that drive both resilience and insurability.
• Risk engineering and advisory services: Our members can provide expertise on risk informed zoning, resilient and improved future proof building codes, and provide recommendations on how to improve resilience of planned infrastructure investments to help governments reduce residual risks before disasters strike. This practical input complements insurance solutions and strengthens the overall resilience of national and local economies.
• Risk modelling innovation: In April 2025, the IDF Risk Modelling Steering Group launched new open-access modelling tools to increase transparency and national ownership of disaster data. These tools, designed to be free and open access, empower governments to identify where resilience investments will have the greatest impact for the public good.
• Policy and regulation for resilience: Through the Law, Regulation & Resilience Policies Working Group (LRRP), the IDF is shaping enabling environments that incentivise risk reduction and expand what can be insured, through for example providing targeting input into the IAIS-World Bank paper for the G20 Sustainable Finance Working Group.

Our call to action

On this IDDRR, we echo the UN's urgent calls and add our own:

1. Increase funding for disaster risk reduction: Governments must allocate more than the current 1% of budgets for DRR, and international donors need to scale up resilience financing. It costs far less to prevent losses than to pay for the disasters later.
2. Ensure all investments are risk-informed and resilient: From national budgets to private sector portfolios, decisions must be grounded in risk data, aligned with climate adaptation strategies, and designed to prevent the creation of new risks.

The bottom line: Resilience pays

For every $1 invested in resilience, $4 is saved in avoided losses. Stronger building codes, smarter zoning, and resilient infrastructure don't just protect lives; they preserve economic stability, reduce humanitarian crises, and keep insurance affordable. The IDF Disaster Risk Reduction (DRR) Working Group has the main objectives of increasing focus on DRR as a complement to protection gap solutions to increase the resilience of vulnerable communities; integrating a DRR perspective into IDF programmes, and giving more visibility to the role of insurance in disaster risk reduction.

These priorities are echoed and built on in the recent joint Bridgetown Initiative and Insurance Development Forum paper, "From Risk to Resilience: A Call to Action for Disaster Risk Reduction and Finance" (2025), which calls for scaled-up DRR financing, integration of risk reduction into all development spending, and stronger public-private partnerships to keep risks financeable and insurable.

Through our work with the IDF, we are actively speaking to and convening change agents globally. Through its work, IDF has established itself as a trusted partner, as demonstrated by the almost 120 organisations that contribute to its projects and initiatives.

Find out more about our work.

Saoirse Jones is from Zurich Insurance and Mathieu Verougstraete from UNDRR, both Members of IDF Operating Committee and Co-Chairs of the IDF Disaster Risk Reduction (DRR) Working Group