Collaboration on catastrophe risk insurance for cyclones, earthquakes and tsunamis
SUVA, FIJI, March 31, 2017 — Pacific Island countries will have better access to catastrophe insurance to reduce financial impacts in the aftermath of natural disasters, including major cyclones, earthquakes and tsunamis, as a result of a new regional disaster risk finance project launched today in Fiji.
The US$29.73 million project - PCRAFI: Furthering Disaster Risk Finance in the Pacific - builds on eight years of regional collaboration through the Pacific Catastrophe Risk Assessment and Insurance Initiative (PCRAFI), and shared experiences from similar catastrophe risk pools supported by the World Bank in Africa and the Caribbean.
The project draws on experience from past PCRAFI insurance payouts, including one to Vanuatu in 2015 when Tropical Cyclone Pam triggered a US$1.9 million emergency cash injection. Vanuatu received the funds within one week of the event to support the recovery process, including the mobilization of nurses to affected provinces.
“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,” said Vanuatu Minister of Finance and Economic Management, Gaetan Pikioune. “Following the devastation Cyclone Pam wreaked on Vanuatu in 2015, we are acutely aware of the value insurance programs like this bring in supporting our ability to respond quickly to disasters.”
The project significantly scales-up regional collaboration to increase financial resilience and includes two core components. First, it supports the PCRAFI Facility, which provides rapid response emergency funds immediately after major natural hazard events. Second, it provides technical assistance to support finance ministries in developing their disaster risk financing strategies.
Ministers of Finance from the Pacific island region established the PCRAFI Facility in June 2016, placing countries in the lead to design more effective disaster risk financing solutions to address climate and disaster risks.
“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,” said Dame Meg Taylor, Secretary-General of the Pacific Islands Forum. “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.”
The PCRAFI Program benefits from more than US$40 million in grants through the World Bank-managed PCRAFI Multi-Donor Trust Fund, including contributions from Germany, Japan, the United Kingdom, and the United States through the G7 InsuResilience Initiative, which aims to increase access to climate risk insurance for the most vulnerable.
“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,” said Michel Kerf, World Bank Country Director for Timor-Leste, Papua New Guinea and the Pacific Islands. “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.”
“We are happy to be supporting the PCRAFI Program to assist countries in using PAcRIS – a regional database of hazard and exposure data,” said Colin Tukuitonga, Pacific Community Director-General. “Quality data is essential in multiple sectors, including disaster risk management, infrastructure design and in stimulating domestic insurance markets.”