Insurers mourn missed chance of EU insurance agency

An EU development insurer could also use reinsurance to mobilise substantial amounts of non-development finance institutional capital from the private insurance market and from EU export credit agencies, Mudde said.

The problem, in his view, was that in the EU discussions about the European Financial Architecture for Development (EFAD) an insurance approach, like the World bank’s MIGA, had never been considered. “There is a lack of knowledge about the success of insurance products in mobilising capital for development. Public insurance providers are more successful in mobilising capital for development than development banks,” he said. Their operational costs are in general also much lower than those of development banks. So, also from an aid efficiency and aid effectiveness point of view an insurance approach would make sense. The importance of mobilizing capital has been debated for a decade and was picked by the G20’s Eminent Persons Group in 2018 and the “Building Bridges” report of the Islamic Development Bank in 2020, which clearly set out the benefits of an insurance approach to mobilise capital for development. Although neither G20 reports has so far gained traction, Mudde said it would make a substantial contribution to the Team Europe approach. “Insurance could be used to mobilise private capital from both international and domestic banks and institutional investors,” he said. In addition, it could provide insurance to European development finance institutions (DFIs) that would contribute to a convergence of their operations, a more effective use of scarce economic development capital and reduce the competition between DFIs.

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