World Bank Group World Bank Group Caribbean Catastrophe Risk Insurance Initiative Olivier Mahul Program Manager, Insurance for the Poor, World Bank Coordinator, World Bank Catastrophic Risk Insurance Working Group Expert Meeting on Requirements of the Catastrophe Insurance and Weather Risk Management Markets for National Meteorological and Hydrological Services December 5-7, 2007, WMO Headquarters, Geneva Switzerland
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World Bank Group Caribbean Catastrophe Risk Insurance Initiative Olivier Mahul Program Manager, Insurance for the Poor, World Bank Coordinator, World Bank.
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World Bank GroupWorld Bank Group
Caribbean Catastrophe Risk Insurance Initiative
Olivier MahulProgram Manager, Insurance for the Poor, World BankCoordinator, World Bank Catastrophic Risk Insurance Working Group
Expert Meeting on Requirements of the Catastrophe Insurance and Weather Risk Management Markets for National Meteorological and Hydrological ServicesDecember 5-7, 2007, WMO Headquarters, Geneva Switzerland
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The Caribbean Catastrophe Risk Insurance Facility
The Problem After a catastrophe event governments need money quickly to
provide emergency relief and early rehabilitation and keep services running
But aid only arrives slowly, often months later Traditional insurance requires proof of loss – again causing
timing delays
The Solution A Facility to provide immediate post-loss liquidity to
Caribbean Insurance but based upon defined events allowing rapid
payment Caribbean wide to allow benefits of diversification Protected by international reinsurance and capital markets to
give stability Backed by donor contribution to guarantee sustainability
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Necessary conditions for the emergence and long-term viability
Simple instrument Tailored to a specific need Good financial engineering Transparent disbursement rules
Political economy One off donor intervention No cross subsidization Peer pressure among countries Local ownership Win-Win-Win deal between clients, donors and
reinsurers
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Country-specific risk modeling
Portfolio of Risk Exposures Portfolio of Risk Exposures for Wind & Storm Surgefor Wind & Storm Surge
Historical Wind Track DataHistorical Wind Track Data
VulnerabilityVulnerability
WindWind HazardHazard
Damage and Financial LossDamage and Financial Loss
Storm Surge HazardStorm Surge Hazard
5544332211
TSTS
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From parametric insurance…
“Quake in a box” – Tokyo Marine-1997 and Concentric Ltd (Tokyo Disneyland) 1999
Payoff based on earthquake magnitude > Magnitude occurring within a region defined by boxes or circles