Publication: Managing Catastrophic Disaster
Risks Using Alternative Risk financing and Pooled Insurance Structures
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2001-05
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2013-06-17
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This report examines the constraints and opportunities in implementing a catastrophe insurance system which can resolve the key obstacles impeding broader implementation of a risk funding approach. The four main pillars in such a strategy involve: 1) strengthening insurance sector regulatory requirements and supervision; 2) establishing broad-based pooled catastrophe funding structures with efficient risk transfer tools; 3) promoting public insurance policies linked to programs for loss reduction in the uninsured sectors; and 4) strengthening the risk assessment and enforcement of structural measures such as zoning and building code compliance. The report is structured as follows: chapter 1 examines the characteristics of the global insurance and reinsurance market and its links with Caribbean insurers and policyholders Chapter 2 examines the domestic Caribbean insurance market structure and institutions, and their commercial practices Chapter 3 discusses how structural mitigation and vulnerability reduction measures can prove to be cost-effective investments that can dramatically reduce exposure risks on properties. Chapter 4 analyzes the modalities of risk transfer for potential financial losses. Chapter 5 demonstrates innovations being developed for catastrophe risk management. Chapter 6 examines risk management options. Chapter 7 concludes by demonstrating the financial feasibility and sustainability of operating and managing catastrophe risks under a sub-regional pool.
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“Pollner, John D.. 2001. Managing Catastrophic Disaster
Risks Using Alternative Risk financing and Pooled Insurance Structures. World Bank Technical Paper ; No. 495. © World Bank. http://hdl.handle.net/10986/13961 License: CC BY 3.0 IGO.”
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Publication Catastrophe Risk Management : Using Alternative Risk Financing and Insurance Pooling Mechanisms(World Bank, Washington, DC, 2001-02)Residual stochastic risks from catastrophic natural events can be addressed through insurance pooling and risk transfer mechanisms that provide the basis for financial protection and instill strong incentives for reducing vulnerability. To reduce the economic stress after disasters, the author shows, World Bank instruments could be used to support initiaitves to help correct market imperfections in catastrophe insurance. He takes a step-by-step approach to showing how both risk pooling structures and alternative catastrophe coverage mechanisms (long-maturity risk financing facilities, weather-indexed contracts, and capital market instruments) can achieve better risk protection and financing terms--enough to allow the expansion of insurance coverage of public assets and private property. 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These lessons are expected to be used in developing affordable, effective and sustainable country-specific catastrophe insurance programs.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. 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Increasing CCRIF's transparency is also vital to broadening understanding of CCRIF's governance structure, modeling, and policy coverage and consolidating CCRIF as a well-recognized and widely-valued Caribbean institution.Publication Innovation in Disaster Risk Financing for Developing Countries(Washington, DC, 2011-03)This report aims to advance the dialogue on creative, forward-looking solutions for developing countries by presenting recent innovations on disaster risk financing and insurance developed by the private markets as well as the international donor community, from the macro (government) level down to the micro (household) level. It discusses how these innovations can be adapted and implemented in developing countries to better protect efficiently those countries against the financial consequences of natural disasters. Section one provides an introduction to the economic and fiscal impacts of natural disasters on developing countries. Section two examines examples of innovation in the private insurance and capital markets that may have applications in sovereign disaster risk financing for developing countries. Section three examines how innovations coming out of mature property catastrophe risk insurance (PCRI) markets could serve in low and middle-income countries. Section four considers how innovation is taking seed in creative disaster micro insurance programs in low- and middle-income countries. Section five wraps up the report with brief concluding remarks.
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