Publication: Technical Discussion Paper on Concessional Insurance
Loading...
Date
2017-01
ISSN
Published
2017-01
Author(s)
Editor(s)
Abstract
Climate change, weather-related disasters, and slow-onset changes such as rising sea levels threaten sustainable development and force some 26 million people into poverty every year. Sovereign disaster risk insurance and other forms of risk finance, as part of a broader financial protection strategy, can help countries increase their financial resilience to disaster and climate shocks. This discussion paper aims to contribute to the ongoing discussions among development partners about the operationalization of premium subsidies for sovereign disaster risk insurance, the context of increasing interest among development partners in providing concessional finance, including premium subsidies. The paper draws on lessons from past and existing premium subsidy schemes, and from the World Bank’s operational experience on disaster risk financing and insurance (DRFI), including regional catastrophe risk pools. It aims to inform the dialogue on how to operationalize concessional insurance. The objective of the paper is not to provide specific recommendations, but rather to highlight key issues and options to be considered when operationalizing concessional insurance. This discussion paper builds on the World Bank Group’s cascade approach, which aims to crowd in private sector capital and markets to address the development challenges posed by disaster and climate shocks. Sovereign disaster risk insurance uses the capital of (re)insurance companies to transfer the financial cost of disaster response from client countries to the private investors. Furthermore, it utilizes private sector experience in designing appropriate risk financing solutions for clients.
Link to Data Set
Citation
“World Bank Group. 2017. Technical Discussion Paper on Concessional Insurance. © World Bank. http://hdl.handle.net/10986/31217 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Advancing Disaster Risk Financing and Insurance in ASEAN Member States : Framework and Options for Implementation, Volume 2. Technical Appendices(Washington, DC, 2012-04)This report is part of a project being jointly conducted by the World Bank, the Global Facility for Disaster Reduction and Recovery (GFDRR), the Association of Southeast Asian Nations (ASEAN) Secretariat, and United Nations International Strategy for Disaster Reduction (UNISDR). It aims to provide capacity building on disaster risk financing and insurance (DRFI) in ASEAN Member States. DRFI is a relatively new topic and, therefore, training and capacity building of local stakeholders is essential. Governments must understand the benefits and the limitations of disaster risk financing and insurance as part of their comprehensive Disaster Risk Management (DRM) strategies. This report presents main findings and recommendations on DRFI in the ASEAN region. Following the World Bank disaster risk financing and insurance framework, it consists of five chapters, including this introduction. Chapter two presents a preliminary economic and fiscal risk assessment of natural disasters in ASEAN Member States. Chapter three provides an overview of the fiscal management of natural disasters currently implemented by ASEAN Member States. Chapter four reviews the state of the private catastrophe insurance markets, including property catastrophe risk insurance, agricultural insurance, and disaster micro-insurance. Chapter five identifies five main recommendations for strengthening the long-term financial and fiscal resilience of ASEAN Member States against natural disasters, as part of their broader disaster risk management and climate change adaptation agendas.Publication Caribbean and Central American Partnership for Catastrophe Risk Insurance : Pooling Risk to Safeguard against Catastrophes Generated by Natural Events(Washington, DC, 2014-04)Countries in the Caribbean and Central America are highly vulnerable to the adverse effects associated with earthquakes, tropical cyclones, and other major hydro-meteorological events such as excessive rainfall. Aftermath of disasters typically place significant strain on the fiscal systems of affected countries. Consequently, ministers of the Central American integration system (SICA) and Caribbean community (CARICOM) countries have expressed a strong intention to collectively manage the disaster risk. By understanding the loss potential of disasters caused by natural events and the extent of public intervention in recovery and reconstruction efforts, governments can ascertain their respective contingent liabilities. Sovereign disaster risk financing and insurance can also safeguard against sudden macroeconomic shocks that negatively impact fiscal performance, and in turn, economic development. Caribbean and Central American governments are constrained in their ability to access quick liquidity to absorb fiscal shocks associated with natural hazard impacts because they have limited ability to create contingency funds, and limited capacity for external borrowing. The World Bank in partnership with the United States department of treasury assessed various options, which guided Ministers of Finance of Central America, Panama, and the Dominican Republic (COSEFIN) to identify the Caribbean catastrophe risk insurance facility (CCRIF) as the best option. The CCRIF provides cost-effective and fast-disbursing liquidity, and is an efficient way to finance a liquidity gap arising in the immediate aftermath of disaster.Publication Country Insurance : Reducing Systemic Vulnerabilities in Latin America and the Caribbean(Washington, DC, 2008-03)This study begins from the premise that output and consumption are more volatile and prone to sharp contractions in developing than in high-income economies. This suggests that developing countries are somehow "underinsured" and may thus need to invest more in "country insurance" policies. To shed some light on this issue, the author begin by providing in the first chapter evidence of the excessive volatility faced by developing countries in general (and Latin American and Caribbean, LAC, countries in particular) and then discuss some of the welfare costs associated with such volatility. In second chapter, the author focus on the main trade-offs and on the strategic choices confronted by developing countries if they decide to increase their resilience to external shocks. Finally, in the third chapter, the author look at different policy options, focusing on how the international financial institutions (IFIs) in general and the World Bank in particular can help developing countries' reduce their vulnerability to external shocks. While excessive volatility in developing countries affects both government and the private sectors, this study limits its focus to the government sector. The private sector challenges will be addressed in future research.Publication Philippines - Discussion Notes : Challenges and Options for 2010 and Beyond(World Bank, 2011-06-09)With the global economy on the way to recovery from the financial crisis, the Asian economies appear poised to bounce back strongly. For most people in the Philippines, however, a return to the status quo ante will offer little consolation. That is because when economic growth accelerated during 2002-08, poverty did not decline as hoped. With a third of the population currently below the poverty line, and high and rising inequality in incomes, the country's main development challenge is to achieve growth that is much more widely shared to make growth work for the poor. Making growth work for the poor in the Philippines is a significant development challenge, but one that is worth pursuing vigorously. The new administration not only has the mandate but the historic opportunity to deliver on this goal as well as other election platforms on which it was voted to power. These include 'the organized and widely-shared rapid expansion of the economy through a government dedicated to honing and mobilizing the people's skills and energies as well as the responsible harnessing of natural resources; moving to well-considered programs that build capacity and create opportunity among the poor and the marginalized in the country; policies that create conditions conducive to the growth and competitiveness of private businesses, big, medium and small; and making education the central strategy for investing in people, reducing poverty and building national competitiveness.' In addition, the new administration is committed to fight corruption. These goals are fully echoed in the strategy and policy actions identified above and elaborated in the accompanying discussion notes.Publication Disaster Risk Financing and Insurance in Sub-Saharan Africa(Washington, DC, 2012-11)This policy note is a preliminary effort to present a body of knowledge on the state of disaster risk financing and insurance in Sub-Saharan Africa. It aims to contribute to a strengthened understanding and collective knowledge within Sub-Saharan Africa on disaster risk financing and insurance, and to encourage open dialogue between stakeholders on how strategies can best be developed to increase financial resilience against natural disasters. The report is targeted at policy-makers and actors in the international community with an interest in this agenda. In the context of this report, disaster risk financing and insurance refers to instruments and mechanisms at the macro, market and micro level that provide financial resources to assist with response and recovery efforts in the aftermath of a disaster. This report focuses on natural disasters, which we can describe as unforeseen events driven by natural phenomena that cause serious disruption of the functioning of a community or a society causing widespread human, material, economic and/or environmental losses which overwhelm the capacity of the affected community or society. This report discusses rapid onset disasters such as cyclones, earthquakes and floods but also slow onset events such as drought. Sub-Saharan African countries are highly exposed to a wide range of adverse natural events, with hydro-meteorological hazards impacting the largest number of people. Disaster risk financing and insurance (DRFI) has been highlighted by the African union, regional economic communities and individual countries as an area for regional financial cooperation.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2014(Washington, DC, 2013-10-06)The past 25 years have witnessed unprecedented changes around the world—many of them for the better. Across the continents, many countries have embarked on a path of international integration, economic reform, technological modernization, and democratic participation. As a result, economies that had been stagnant for decades are growing, people whose families had suffered deprivation for generations are escaping poverty, and hundreds of millions are enjoying the benefits of improved living standards and scientific and cultural sharing across nations. As the world changes, a host of opportunities arise constantly. With them, however, appear old and new risks, from the possibility of job loss and disease to the potential for social unrest and environmental damage. If ignored, these risks can turn into crises that reverse hard-won gains and endanger the social and economic reforms that produced these gains. The World Development Report 2014 (WDR 2014), Risk and Opportunity: Managing Risk for Development, contends that the solution is not to reject change in order to avoid risk but to prepare for the opportunities and risks that change entails. Managing risks responsibly and effectively has the potential to bring about security and a means of progress for people in developing countries and beyond. Although individuals’ own efforts, initiative, and responsibility are essential for managing risk, their success will be limited without a supportive social environment—especially when risks are large or systemic in nature. The WDR 2014 argues that people can successfully confront risks that are beyond their means by sharing their risk management with others. This can be done through naturally occurring social and economic systems that enable people to overcome the obstacles that individuals and groups face, including lack of resources and information, cognitive and behavioral failures, missing markets and public goods, and social externalities and exclusion. These systems—from the household and the community to the state and the international community—have the potential to support people’s risk management in different yet complementary ways. The Report focuses on some of the most pressing questions policy makers are asking. What role should the state take in helping people manage risks? When should this role consist of direct interventions, and when should it consist of providing an enabling environment? How can governments improve their own risk management, and what happens when they fail or lack capacity, as in many fragile and conflict-affected states? Through what mechanisms can risk management be mainstreamed into the development agenda? And how can collective action failures to manage systemic risks be addressed, especially those with irreversible consequences? The WDR 2014 provides policy makers with insights and recommendations to address these difficult questions. It should serve to guide the dialogue, operations, and contributions from key development actors—from civil society and national governments to the donor community and international development organizations.Publication World Development Report 2015(Washington, DC: World Bank, 2015)Every policy relies on explicit or implicit assumptions about how people make choices. Those assumptions typically rest on an idealized model of how people think, rather than an understanding of how everyday thinking actually works. This year’s World Development Report argues that a more realistic account of decision-making and behavior will make development policy more effective. The Report emphasizes what it calls 'the three marks of everyday thinking.' In everyday thinking, people use intuition much more than careful analysis. They employ concepts and tools that prior experience in their cultural world has made familiar. And social emotions and social norms motivate much of what they do. These insights together explain the extraordinary persistence of some social practices, and rapid change in others. They also offer new targets for development policy. A richer understanding of why people save, use preventive health care, work hard, learn, and conserve energy provides a basis for innovative and inexpensive interventions. The insights reveal that poverty not only deprives people of resources but is an environment that shapes decision making, a fact that development projects across the board need to recognize. The insights show that the psychological foundations of decision making emerge at a young age and require social support. The Report applies insights from modern behavioral and social sciences to development policies for addressing poverty, finance, productivity, health, children, and climate change. It demonstrates that new policy ideas based on a richer view of decision-making can yield high economic returns. These new policy targets include: the choice architecture (for example, the default option); the scope for social rewards; frames that influence whether or not a norm is activated; information in the form of rules of thumb; opportunities for experiences that change mental models or social norms. Finally, the Report shows that small changes in context have large effects on behavior. As a result, discovering which interventions are most effective, and with which contexts and populations, inherently requires an experimental approach. Rigor is needed for testing the processes for delivering interventions, not just the products that are delivered.Publication Services Unbound(Washington, DC: World Bank, 2024-12-09)Services are a new force for innovation, trade, and growth in East Asia and Pacific. The dramatic diffusion of digital technologies and partial policy reforms in services--from finance, communication, and transport to retail, health, and education--is transforming these economies. The result is higher productivity and changing jobs in the services sector, as well as in the manufacturing sectors that use these services. A region that has thrived through openness to trade and investment in manufacturing still maintains innovation-inhibiting barriers to entry and competition in key services sectors. 'Services Unbound: Digital Technologies and Policy Reform in East Asia and Pacific' makes the case for deeper domestic reforms and greater international cooperation to unleash a virtuous cycle of increased economic opportunity and enhanced human capacity that would power development in the region.Publication Global Economic Prospects, June 2024(Washington, DC: World Bank, 2024-06-11)After several years of negative shocks, global growth is expected to hold steady in 2024 and then edge up in the next couple of years, in part aided by cautious monetary policy easing as inflation gradually declines. However, economic prospects are envisaged to remain tepid, especially in the most vulnerable countries. Risks to the outlook, while more balanced, are still tilted to the downside, including the possibility of escalating geopolitical tensions, further trade fragmentation, and higher-for-longer interest rates. Natural disasters related to climate change could also hinder activity. Subdued growth prospects across many emerging market and developing economies and continued risks underscore the need for decisive policy action at the global and national levels. Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.