- ASEAN Member States are highly exposed to a range of adverse natural events. Each year, on average, the region suffers damage in excess of US$4.4 billion a consequence of natural hazards.
- Disasters place a significant fiscal burden on governments in the region and many of them face difficulties in securing adequate and timely funding for early recovery.
- Underdeveloped in most ASEAN Member States, private disaster insurance markets have failed to offset a significant share of government contingent liability.
- Disaster losses are expected to rise in the future, due to rising exposure and vulnerability, increasing the fiscal burden of disasters if financial and risk management is not improved.
- There is growing interest in the region to improve the management of the fiscal burden linked to natural disasters and inter-annual volatility in disaster spending.
- Private disaster risk insurance markets show signs of growth which could be further stimulated by public sector engagement.
- Develop risk information and modeling systems to assess the economic and fiscal impact of natural disasters as part of overall fiscal risk management.
- Develop disaster risk financing and insurance strategies at the national and subnational levels to manage budget volatility due to disasters and provide disaster insurance coverage for key public assets.
- Establish national disaster funds as a financial mechanism to ensure the fast disbursement and execution of funds after a disaster.
- Promote private catastrophe risk insurance markets through public-private partnerships and the development of enabling regulatory and risk market infrastructure.
- Strengthen regional cooperation on disaster risk financing and insurance, particularly through:
- regional risk information, assessment, and modeling systems;
- regional knowledge advisory services and capacity building programs to facilitate knowledge sharing; and
- developing a regional vehicle which could leverage international reinsurance and capital markets.