How global insurers are helping extend billions in financing to emerging markets

Global insurance companies are proving their potential to be a potent force for scaling up lending to companies in developing countries, despite the challenges they face.

From high risks to underdeveloped markets and regulatory constraints, a litany of factors has limited the exposure of insurers in emerging economies. But by partnering with development finance institutions, which specialize in overcoming these obstacles, global insurance companies can get exposure to profitable and impactful transactions.

The results can unlock billions of additional dollars in financing to companies operating in some of the world’s most challenging environments.

A risk-sharing program led by the International Finance Corporation (IFC) – the private sector arm of the World Bank Group – is a case in point. In December 2024, a consortium of 14 insurers agreed to provide IFC with $3 billion in credit insurance. With the protection against default that the program offers, IFC will be able to double its lending capacity to about $6 billion.

Crucially, the participating insurers agree to rely on IFC’s due diligence and analysis to vet loan recipients, eliminating the need for insurers to conduct their own individual reviews and vetting across markets they may not be actively operating in.

IFC will use this credit insurance capacity to support additional lending to “real economy” sectors such as infrastructure, manufacturing, agribusiness, and services – where demand is great, but where some companies often face limited access to credit. The facility is modeled on earlier programs which focused on providing credit insurance to IFC loans to the financial sector and is part of our Managed Co-Lending Portfolio Program (MCPP)—a portfolio syndications platform for institutional investors and insurers. Collectively, MCPP for credit insurers has raised nearly $10 billion in credit insurance capacity.

Stakeholder Interests are Strongly Aligned

An important characteristic of the MCPP is that it connects the interests of its three key stakeholders:  borrowers, IFC, and insurers.

Our clients in developing markets have long sought loans that support the industrial base. The latest iteration of MCPP responds by allowing IFC to make much larger loans to these types of companies – ranging from transport to telecoms, to manufacturing and agribusiness.

The program also fulfills a distinct need of our own. As the largest global development institution focused on the private sector in emerging markets, IFC seeks creative ways to mobilize more private capital to enhance the impact we can have. The credit backstop is exactly the kind of innovative solution that helps us to fulfill our mission.

MCPP also serves the needs of insurers. The global insurance industry is expected to expand its revenue by as much as $9.8 trillion by 2027; however, emerging markets currently account for less than a quarter of the market size. The gap presents an opportunity for insurance companies as they target high quality long-term development finance assets in emerging markets.

The program offers insurers three compelling benefits. First, exposure to IFC loans generates additional business. Second, these loans create valuable diversification. For instance, property insurance accounts for a large majority of their business, creating significant exposure to weather events. But a hurricane in Miami won’t impact a cement manufacturer in Kenya. Finally, the insurers tap into IFC’s deep expertise in originating sustainable loans. IFC’s extensive diligence ensures that they are supporting reputable and sustainable businesses while also achieving development impact.

While attracting more private investments into developing countries at scale will take time, MCPP is an effective way to provide additional funding to companies conducting impactful business in developing markets. The trust these insurers place in IFC strengthens our ability to spur economic development – and signals a growing role for insurers in supporting growth where it is needed most.
 

To learn more about IFC’s MCPP, please visit our website.