Swiss Re supports first sovereign catastrophe risk insurance in Asia Pacific
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Pilot programme arranged by the World Bank provides protection against earthquake, tsunami and tropical cyclone risks.
The Pacific Islands countries, with a combined population of almost 10 million people, are highly exposed to natural disasters. Through the Pacific Catastrophe Risk Insurance pilot (PDF, 57 KB) arranged by the World Bank with the support of the Government of Japan, five of the Pacific Islands countries including Marshall Islands, Samoa, Solomon Islands, Tonga and Vanuatu, will receive protection against earthquake, tsunami and tropical cyclone risks from Swiss Re and other insurers. Launched on 18 January 2013, the programme will assist the governments of the Pacific Islands to transfer catastrophic risk and provide emergency funds for disaster relief efforts.
Modelled loss approach for faster payouts
Natural disasters, such as Tropical Cyclone Evan that made landfall in December last year causing widespread destruction of infrastructure and loss of property in Fiji and Samoa, are an impediment to economic development. The cost of relief, recovery and reconstruction efforts is a major financial strain for governments.
Through the Pilot Catastrophe Risk Insurance programme, Swiss Re and other insurers support the public sector to reduce its contingent liabilities. If a natural disaster strikes any of the five countries, a modelled loss approach will be used to quickly approximate the damage on the ground and trigger the payout under the programme. The project is currently in its pilot stage and will expand to include more Pacific Island States as it grows.
Public-private partnership in action
The support of this transaction by Swiss Re reaffirms its long standing commitment to help the public sector build resilience through the use of innovative insurance solutions and the public-private partnership model. It is also the first sovereign catastrophe risk transfer programme in Asia Pacific.