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World Bank GroupWorld Bank Group

Catastrophic Risk FinancingWorld Bank’s Initiatives

EXPERT MEETING ON REQUIREMENTS OF THE CATASTROPHE INSURANCE AND WEATHER RISK MANAGEMENT MARKETS FOR NATIONAL METEOROLOGICAL AND HYDROLOGICAL SERVICES5-7 December 2007, WMO Headquarters, Geneva, Switzerland

Eugene Gurenko

Lead Insurance Specialist

Olivier Mahul

Program Manager, Insurance for the Poor

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World Bank GroupWorld Bank Group

Strengths of the World Bank for natural disaster risk management

It is the only multilateral organization with the world-class knowledge in-house already installed in natural risk management.

The World Bank has: Insurance expertise Treasury expertise (as investment bank for countries) Risk management expertise Lowest cost of borrowing in the world Knowledge of the risk map globally and individually for each country Contacts in each country Convening power Reputation

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World Bank GroupWorld Bank GroupAlphabet Soup

CCRIF GFDRR GIRIF Cat DDO GCMB WB CRIWG

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World Bank GroupWorld Bank Group

Caribbean Catastrophe Risk Insurance Facility

Reserves

Reinsurance/ART(Purchased on international

financial markets)

Country 2

Country 3

Country 1

Country 4

Country 5

Country 6

Country 7

Premium Payout

Insurance Payout

Insurance Premium

Initial donor contribution

Initial donor contribution

Initial donor contribution

Growth

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World Bank GroupWorld Bank Group

Global Facility for Disaster Risk Reduction

Track II Operates as a multi-donor trust fund Provides technical assistance to assist low- and middle-

income countries to mainstream disaster risk reduction Key deliverables include ex ante disaster risk financing

Some GFDRR-funded projects Parametric flood insurance for agriculture in Vietnam Weather based crop insurance in India Parametric flood insurance in Bangladesh Central American catastrophe insurance pool Pacific Catastrophic Risk Pool Etc.

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World Bank GroupWorld Bank GroupGlobal Index Reinsurance Facility

Objectives Provide parametric (re)insurance solutions in ACP

countries EU Trust Fund

Technical assistance Premium subsidies

Index Re Specialized insurance company capitalized by

IFC, a reinsurance Company, etc.

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World Bank GroupWorld Bank Group

Disaster Risk Management Loan for IBRD Eligible Borrowers (Cat DDO)

Disaster Risk Management Loan for IBRD Eligible Borrowers

Assurance of automatic drawdown upon an occurrence of disaster

– Immediate disbursement after the occurrence of a disaster

– Certainty of disbursement – Flexible use of funds (a budget support instrument)

Affordable pricing Long drawdown period The Bank’s assistance in establishing effective

disaster risk management program

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World Bank GroupWorld Bank GroupGlobal Catastrophe Mutual Bond

CountriesCountries

DonorsDonors

GCMBGCMB ReRe--insurers & Capital insurers & Capital Market InvestorsMarket Investors

Collateral TrustCollateral Trust

AAA AssetsAAA Assets

Disaster Disaster Contingent Contingent paymentspayments

PremiumsPremiums CouponsCoupons

PrincipalPrincipal

SubsidiesSubsidies

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World Bank GroupWorld Bank Group

World Bank Catastrophic Risk Insurance Working Group

Established in October 2007 Coordinates the WB initiatives on

catastrophic risk financing Inform/collaborate with outside partners

on WB cat risk financing initiatives