When we look at what it would require to create effective healthcare systems in our Member States the answer is much more than hospitals or insurance coverage. Healthcare systems rely on infrastructure funded and constructed with border-moving medicines, on investors and lenders who are ready to put money in over uncertainty. All these factors revolve around one very important aspect, which is confidence. Risk usually limits that confidence.
This is the challenge that we are supposed to meet at the Islamic Corporation of the Insurance of Investment and Export Credit (ICIEC) a member of the Islamic Development Bank Group. ICIEC does not offer health or medical insurance. Instead, we are a multilateral credit and political risk insurer. We play an upstream role in healthcare: we facilitate financially, investing, and trading flows that support the structure and sustainability of healthcare systems.
The risk behind the gap
In most of our Member States, governments and stakeholders in the private sector are deeply committed to the increase of access to healthcare. Hospital, medical equipment, and pharmaceutical supply chain plans are usually highly developed.
However, such efforts often come to a halt not because of the absence of will or funding, but rather because of risk. Investors want to understand regulatory stability, currency convertibility and enforceability of contracts. Lenders would want a guarantee that their loans will be recovered even in an unfavourable political or economic environment. Pharmaceutical and medical equipment exporters require insuring against non-payment.
Without such guarantees, there is no movement of capital, limited trade and stalled or stagnant critical healthcare projects. These flows are not peripheral flows to be de-risked, but rather fundamental facilitators of healthcare system development.
ICIEC’s role: De-risking capital and trade
ICIEC takes measures to overcome these obstacles by offering a range of Shariah-compatible risk mitigation solutions that would facilitate investment and trade. Our solutions are non-payment insurance to lenders, political risk insurance to investors, credit insurance solutions to support exporters and trade finance transactions. The combination of these instruments makes it possible to:
- Healthcare infrastructure and hospital construction financing.
- Investment in large scale PPP healthcare development.
- Trustworthy importation of drugs, healthcare equipment and supplies.
The model by ICIEC is unique in that it integrates the principles of risk sharing with the insurance solutions in both trade and investment. Through reinsurance and collaborations, we raise funds and maintain transactions in more risky markets where traditional financing practices might be limited. The outcome is enhanced access to funding, better supply chains, and finally, enhanced healthcare provision to communities.
Impact on the ground
The effect of such strategy can be best demonstrated in terms of tangible deals. In Cote d’Ivoire, ICIEC assisted in infrastructure development in the healthcare sector which included hospital units and hospitals.
ICIEC, by its nature of mitigating risks using its coverage that strengthens payment security with regards to financial obligations that relate to the sovereign, assisted in boosting the credit profile of the transactions and offered added assurance to lenders. This allowed for organising funding at the right conditions and contributed to creating the necessary healthcare infrastructure and increasing access to quality services in underserved areas.
In Türkiye, ICIEC was involved in the Bursa Integrated Healthcare Campus, which is part of the PPP healthcare program of the country. Long-term financing arrangements made by international lenders were supported by our insurance, allowing a complex, large-scale project to be financially closed.
In addition to infrastructure, ICIEC has always facilitated in the importation of pharmaceuticals and medical equipment, especially when the uncertainty is high. We support the continuation of important healthcare supply chains by maintaining continuity in trade flows in situations where risk perceptions are rising.
The goal in both scenarios is quite evident, to improve capital and bankability and to maintain the systems that provide care.
The broader market dimension
There is a significant aspect of this work that should be more appreciated. Emerging markets in life and health insurance development are strongly associated with the quality of the underlying healthcare systems. Insurance can never provide any meaningful value where the services are not available, are not reliable, and of a reasonable quality.
In the case of the lack of healthcare infrastructure or unreliable supply chains, insurance penetration is structurally constrained. Effectively, insurance markets can only be expanded to the level that the systems under them can provide.
The role of ICIEC is thus prerequisite. ICIEC can help to create an ecosystem in which sustainable insurance markets can develop by facilitating financing of healthcare infrastructure, long-term investment, and maintaining medical supply chains which are vital.
When ICIEC helps hospitals in Côte d’Ivoire to be funded or healthcare PPPs in Türkiye, it goes beyond the single transaction. Such measures are useful in creating the mechanisms and facilities that would support future insurance markets.
This way, ICIEC does not just contribute to the development, but it assists in establishing the environment, in which the market can be formed.
Risk mitigation as a strategic enabler
Policy is not the way to build resilient healthcare systems. They are constructed based on capital flows, trade relations, infrastructure development, and operating supply chains and all this revolves around confidence.
We do not consider risk mitigation in the context of ICIEC a technical afterthought, but a strategic facilitator of development. Our activities produce the environment in which healthcare systems thrive and survive, whether it is hospital campuses in West Africa, integrated healthcare cities in Türkiye, or pharmaceutical supply chains stretched to breaking point, our work produces the environments in which healthcare systems survive and flourish.
The road to strong healthcare systems is paved with trust- the trust to invest, the trust to lend and the trust to deal. Creation and maintenance of such confidence, on behalf of our Member States, is the essence of ICIEC. A
Dr Khalid Khalafalla is the CEO of ICIEC and Acting CEO of ICD.