A $29.73 million regional disaster risk finance project with a parametric insurance facility backed by reinsurance markets has been launched in Fiji to improve access to catastrophe re/insurance within the Pacific Islands.
The new facility represents a scale-up to the PCRAFI: Furthering Disaster Risk Finance in the Pacific project, which has already enabled eight years of collaboration for disaster reponse within the region, drawing on the expertise of similar risk pools supported by the World Bank in Africa and throughout the Caribbean.
The launch of the parametric insurance facility supports the PCRAFI Facility – which provides rapid emergency fund payouts post catastrophe, and offers finance ministries technical assistance in developing better risk financing strategies – by significantly increasing regional collaboration for disaster mitigation and response.
This improved collaboration aims to address climate and disaster risks throughout the Pacific Islands through making access to catastrophe insurance more readily available.
Dame Meg Taylor, Secretary-General of the Pacific Islands Forum, said; “This evolution of PCRAFI is a major advancement in the region to mitigate against the financial impacts caused by extreme climate, weather related and geological hazards.
“Countries have full ownership of the PCRAFI Facility, putting finance ministers in the driving seat for product development and for designing financial instruments that fit national disaster risk financing strategies.”
Vanuatu Minister of Finance and Economic Management, Gaetan Pikioune, added; “In the Pacific we are extremely vulnerable to natural disasters. The PCRAFI Facility will enable us to receive fast cash injections for emergency response and to sustain essential services in times of crisis.”
The new PCRAFI Facility first came into operation in June last year by Ministers of Finance from the Pacific island region, after the region witnessed proof of the economic benefits of rapid post-catastrophe PCRAFI insurance payouts, such as a $1.9 million emergency fund released just one week after the 2015 Tropical Cyclone Pam struck Vanuatu.
Vanuatu Minister of Finance and Economic Management, Gaetan Pikioune, said; “In the Pacific we are extremely vulnerable to natural disasters. The PCRAFI Facility will enable us to receive fast cash injections for emergency response and to sustain essential services in times of crisis.”
The PCRAFI Programme receives more than $40 million in grants through the World Bank-managed PCRAFI Multi-Donor Trust Fund.
Michel Kerf, World Bank Country Director for Timor-Leste, Papua New Guinea and the Pacific Islands, commented the PCRAFI Facility “is just one example of multiple governments and development partners working together to deliver a program that will deliver real benefits for the people of the Pacific.
“The World Bank looks forward to working with partners to continue supporting the development of new insurance products that will meet the specific needs of more Pacific Island countries.”
The addition of the parametric insurance facility to the PCRAFI project means support from international reinsurance markets will be needed to meet the growing capitalisation demands, and alongside other World Bank projects enabling development of re/insurance capacity in emerging markets, the project represents some of the scarcely seen growth opportunities in an increasingly competitive market space.