The Brief: Closing the climate disaster protection gap

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In today’s Brief:

• Closing the climate disaster protection gap
• Financial inclusion among US Latinos
• Climate bond in India
• Building the next era of impact convenings

Featured: Climate Insurance

After Helene, climate insurance models look to close the ‘disaster protection gap.’ The floodwaters of Hurricane Helene left behind widespread devastation and a troubling truth for residents and their towns: Much of the damage is not covered by insurance. Some homeowner policies cover wind damage, but floods are largely excluded; fewer than 3% of homeowners in the affected areas have supplemental coverage under FEMA’s National Flood Insurance Program. In North America, just over 60% of the $1.2 trillion in economic losses from natural disasters over the past decade have been covered by insurance, leaving a “disaster protection gap” of more than $500 billion, Ryan Jones reports for ImpactAlpha. The extreme weather fueled by climate change has widened the financial breach for homeowners, markets and communities. Nearly one in two US homes face flooding, severe wind, earthquake, hail or other climate risks. A new study finds that people who survive hurricanes have shortened lifespans. The fallout from Helene already includes stories of neighborly cooperation and mutual aid. Another outcome may be new models of insurance and risk-pooling to increase the resiliency of other places to the floods, fires and hurricanes to come.

• Market meltdown. “We are marching toward an uninsurable future because we are not acting aggressively enough to reduce greenhouse gas emissions,” former California insurance commissioner Dave Jones told ImpactAlpha last year. In wildfire-plagued California, State Farm no longer issues new property or casualty policies and recently warned it could drop one million homeowners, or nearly one-third of its policies, by 2028 without premium hikes of up to 52%. In hurricane-prone Florida, Progressive, Farmers and AAA have reduced or scrapped operations, prompting undercapitalized companies to move in. Without insurance, many buyers can’t get mortgages, putting the housing market at risk. Home insurers were unprofitable in 18 states last year, up from eight in 2013, according to a New York Times analysis. But save the violins: With spiked premiums, US property and casualty insurers more than doubled their profits last year to a record $88 billion.
  
• Community solutions. New York City has piloted one of the US’s first community-based catastrophe insurance initiatives to boost the financial resilience of low- and moderate-income households against flood risk, Jones reports. The model was one of a handful presented by InnSure, a Boston-based nonprofit fostering “climate friendly insurance solutions,” at Climate Week NYC. Such community-based catastrophe initiatives enlist local governments or community groups to collectively bargain on behalf of residents for broader coverage at lower premiums, or to self-insure through their own risk-bearing entities. Similarly, municipal pooled insurance can protect local infrastructure and budgets by letting multiple cities join forces to spread their risks. South Africa’s Western Cape province is set to launch a first-of-its-kind municipal risk pool next year to protect a half-dozen municipalities against flooding risks. 

• Relief and recovery. As recently as a year ago, Invest Appalachia (and ImpactAlpha) touted the mountainous region as a climate refuge. No more. “The river ran through my house for six hours,” reports Kevin Jones, who lives with his family on the Swannanoa River near Asheville, NC. Helene’s devastating floods have sparked community efforts to help with funeral costs, procure medical supplies, and bring renewable energy and Internet connectivity to stricken communities in western North Carolina, Georgia, Tennessee and Florida. Jones, co-founder of Neighborhood Economics and SOCAP, writes on ImpactAlpha’s subscriber Slack channel that neighbors are seeking to install solar microgrids and mobile communications for community resilience; the Go Fund Me campaign has so far attracted more than $12,000. “There is no suffering when you are building a better future for your neighbors,” he says. More ways to help: Check out United Way of Asheville and Buncombe County and Go Fund Me campaigns for people displaced by Hurricane Helene.
  
• Keep reading, “After Helene, climate insurance models look to close the ‘disaster protection gap,’” by Ryan Jones on ImpactAlpha. 

Sponsored: Sorenson Impact Institute

Designing actionable and inclusive impact convenings. As anyone on the impact investing conference circuit can tell you, there are a lot of events to attend. The Sorenson Impact Institute, which hosts the annual SOCAP conference in San Francisco, surveyed its network of impact professionals to find out how the events can meet the needs of a growing field. “The results reveal a range of opinions,” the institute’s Robert Munson writes in a guest post on ImpactAlpha, “from those who consider convenings as crucial, to those who see them as ‘expensive navel-gazing.’” Three-quarters of respondents viewed convenings as “somewhat” or “extremely” helpful in achieving their goals, with nearly half attending at least one event per year. 

• Value adds. Covid lockdowns created a sense that virtual conferences would be the way forward, reducing carbon emissions as well as travel fatigue. Not so fast. Munson says respondents view in-person events as key to building the field. “Collaboration and networking ranked as the top reasons people attend.” Events also provide a platform for “keeping up with the latest trends, developments and innovations,” and enable creative exchange between stakeholders.
  
• Room for improvement. Chief among attendees’ concerns was the ballooning cost of attendance, including travel expenses. There is a concern that high costs result in the exclusion of “smaller organizations, entrepreneurs and grassroots groups, creating divisions between those who attend global conferences and those who do not.” Another complaint from respondents: Programming can be repetitive and generic. Munson’s own critique: “Impact convenings can sometimes become echo chambers.” A more intentional convening, he says, should include actionable programming, measurable outcomes and inclusive design. 
  
• Keep reading, “Designing actionable and inclusive impact convenings” by Robert Munson. ImpactAlpha is a media partner of SOCAP 24, which takes place Oct. 28-30 in San Francisco. Register with code S24_ImpactAlpha to save $250 off the current ticket price.

Dealflow: Inclusive Fintech

Suma lands $3.8 million and acquires Mooch to promote financial inclusion for US Latinos. Suma Wealth, a fintech company in Los Angeles, wants to “spice up” sometimes dry topics of investment, debt management and wealth creation. Its app uses entertainment and culturally relevant content to boost financial literacy and inclusion among the US’s underserved Latino youth. Suma’s latest financing helped it complete the acquisition of AI-enabled “digital piggy bank” and budgeting app Mooch, based in Pacifica, Calif. It has raised additional seed funding on top of a round led by Radicle Impact, an impact VC firm, earlier this year. 

• Reel deal. Suma acquired savings-focused fintech venture Reel last year, rolling Reel’s automated savings tech into its platform. Suma estimates that Latinos contribute $3.4 trillion to the US GDP. Reel co-founder Daniela Corrente, who joined Suma’s team, said “there are no financial platforms that give them full visibility into their financial lives in a culturally relevant way.” 

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ADB commits $25 million to a climate bond to finance green projects in India. The Asian Development Bank, or ADB, is investing $25 million in a climate bond issued by India’s Vivriti Capital to enhance climate financing for underserved small- and medium-sized businesses. Vivriti’s bond has been certified by the Climate Bonds Initiative. The lender will use the proceeds of the bond to finance solar and wind energy and waste management projects. At least 30% of the proceeds will be designated for financing electric vehicle purchases, charging infrastructure and battery swapping stations. “Climate bonds can bridge the large market gap for climate finance in India while supporting the development of the capital market,” ADB’s Suzanne Gaboury said. Asia has seen an uptick in green, social and sustainability-linked bond issuances, which rose 7.6% in 2023 to $235 billion.

• Check it out.

Dealflow overflow. Investment news crossing our desks:

• Sweden’s Polarium, which develops battery storage for residential and industrial users, raised $49 million following a management change. Investors in the round have also backed Swedish peer Northvolt, once a high-flier that has struggled to scale amid an EV slowdown and cheap imports from China. (Bloomberg)
  
• Indiegraf, a Canadian publishing platform for independent journalists and news organizations, raised $2.2 million in seed funding to make quality local journalism accessible to “every community, no matter their economic status, rural geography or ethnic makeup.” (Axios)
  
• A to Z Impact, an impact first investor, backed housing nonprofit Enterprise’s Renter Wealth Creation Fund, which is looking to raise more than $100 million to preserve affordable housing and share appreciating property values with long-term tenants. (A to Z Impact)
  
• Amsterdam-based EV charging startup Pluq secured a €50 million ($55 million) line of credit from Sweden’s P Capital Partners. (Silicon Canals)
  
• Zebra Impact Ventures invested in AgroSpheres, which is developing biological crop treatments as an alternative to chemical pesticides. (AFN)

Agents of Impact: Follow the Talent

LISC welcomes Rob Lockett, previously with Rocket Community Fund, as executive director of its Detroit office… WORC’s Ellen-Frank Miller joins HCAP Partners as an operating advisor… Acre Impact Capital adds Tshepiso Moahloli as an investment committee member… Sarida Scott, previously a program officer at the Kellogg Foundation, joins the Skillman Foundation as program vice president… Social Finance seeks an impact investment associate in Boston.

The Center for Justice Innovation is looking for a chief research officer in New York… Also in New York, Lumos Capital Group is recruiting an associate or analyst, and the GIIN has an opening for a sponsorships manager… UPKEEP Ventures is looking for an office manager in Dallas… The Global Innovation Lab for Climate Finance is seeking proposals for new climate finance solutions in emerging markets, for its 2025 cohort. 

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Oct. 3, 2024