Swift disaster-risk payouts for Pacific Island countries
Demonstrates the effectiveness of Swiss Re's parametric insurance coverage
Arranged by the World Bank and supported by Swiss Re, this initiative demonstrated how we can assist governments to finance relief efforts following tropical cyclones. The cost of relief, recovery and reconstruction efforts following a natural disaster places a major financial strain on governments. Through the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI), Swiss Re and other re/insurers helped Pacific Island nations bounce back quickly in the event of such disasters.
Should a natural disaster strike any of the five countries covered, a modelled loss approach is used to quickly assess the financial impact of the event and trigger the payout under the programme. This mechanism is similar to that employed by CCRIF SPC, formerly the Caribbean Catastrophe Risk Insurance Facility, in which Swiss Re also has a major role.
A successful model
Sovereign disaster risk transfer is increasingly used to close the financial gap between economic losses and traditional insurance payouts. Several of these schemes, such as CCRIF SPC, FONDEN (Mexico‘s disaster relief fund) and the one in the Pacific Islands have proved that they are up to their task.