ASEANDISASTERRISKFINANCING &INSURANCEFORUM

ASEANDISASTERRISKFINANCING&INSURANCEFORUM
Session3

AdvancingDisasterRiskFinancingandInsurancein Advancing Disaster Risk Financing and Insurance in ASEANCountries:OptionsforConsiderations

OlivierMahul ProgramCoordinator,DisasterRiskFinancing&Insurance,TheWorldBank November8 10,2011 Jakarta,Indonesia

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Disclaimer
Thisreportisaworkinprogresspresentedforfurther collaborativedrafting.Theteamhasmadeeveryattemptto verifythecontentspresented,buttheinformationshouldbe verify the contents presented but the information should be interpretedwithdueconsiderationtoitslimitationsresulting fromthefactthatindirectsourceshavebeenusedwhere primarysourceswerenotavailable,andthatthecollective i il bl d h h ll i knowledgeinthisareaislimited. Thecurrentdraftwillbecompleted/revisedinthelightofthe The current draft will be completed/revised in the light of the discussionwiththeASEANMemberStatesandother participantsduringthisForum.

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Presentationbackground&structure WorldBankandASEANSecretariat backgroundreportonthestateofdisasterrisk financingandinsuranceinASEANCountries; OptionsforconsiderationfromFirstDraft report.

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Keyfindingsandchallenges
Limiteddataandtoolstoassesstheeconomicandfiscal impactofnaturaldisasters I Incompletedisasterriskfinancingandinsurancestrategiesat l t di t i k fi i di t t i t bothnationalandsubnationallevels MostASEANcountrieslackadedicatedvehicletosecureand quicklydisbursefundspostdisasters Privatecatastropheriskinsurancemarketsremainunder developed d l d LimitedregionalcooperationamongASEANCountrieson g ( yp disasterriskfinancingandinsurance(butrecentlypolitical willingnesstosupportsuchcooperation)

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Levelofengagement
Strategiesandinstrumentstoincreasethefinancialandfiscal resilienceoftheASEANcountriesagainstnaturaldisasterscan beappliedatmultiplelevels: pp p
National Provincial Municipal

Thesestrategiesarecomplements Regionaldisasterriskfinancingandinsurancestrategiescan bedevelopedamong: b d l d

Countries Provinces Municipalities(e.g.,megacities)

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Levelofengagement
Strategiesandinstrumentstoincreasethefinancialandfiscal resilienceoftheASEANcountriesagainstnaturaldisasterscan beappliedatmultiplelevels: pp p
National Provincial Municipal

Thesestrategiesarecomplements Regionaldisasterriskfinancingandinsurancestrategiescan bedevelopedamong: b d l d

Countries Provinces Municipalities(e.g.,megacities)

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Recommendation#1 R d ti #1 Developriskinformationandmodelingsystemstoassess theeconomicandfiscalimpactofnaturaldisasters the economic and fiscal impact of natural disasters
Optionforconsideration ASEANcountriescoulddevelop aregionalriskinformation platform
Georeferencedexposure database d t b Inventoryofpublicassets Regionalcatastropheriskmodels Fiscal risk assessment tools to be Fiscalriskassessmenttoolstobe usedbyMoFs toassessthefiscal impactofnaturaldisasters(aspart oftheiroverallfiscalrisk assessmentanalysis) y )

Examples
PacificRiskInformationSystem
ProvidesthePacificIslandcountrieswith Provides the Pacific Island countries with riskassessmentandmodelingtoolsfor enhancedDRM Exposuredatabaseofmorethan3millions assetsatrisk Historicalandsimulatedcataloguesofmajor perils Informationavailableonawebserver

RiskinaBox PrototypedevelopedinIndonesia d l di d i MexicosRFONDEN Financialmodulecoupledwitha p catastropheriskmodeltoassessthe economicandfiscalimpactof naturaldisasters

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Recommendation#2 R d ti #2 Developdisasterriskfinancingandinsurancestrategies atthenationalandsubnationallevels at the national and subnational levels

Optionsforconsideration Developathreetieredrisk layeringapproachtoprotect layering approach to protect thevolatilityofthebudget againstnaturaldisasters p Developnationalinsurance programsofpublicassets
Inventoryofpublicbuildingsand infrastructure Identification of priority public Identificationofprioritypublic assetstobequicklyrehabilitated afteradisaster Designofacatastropheinsurance p g programofpublicassets p

Examples
Contingent credit WB CAT DDO i th Phili i WBCATDDOinthePhilippines Mexicomultilayerriskfinancingstrategy Annualallocation Aggregate insurance Aggregateinsurance Catbond CostaRicacatastropherisktransfer vehicleforpublicassets p

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Recommendation#3 Establishnationalandsubnationaldisasterfunds
Optionforconsideration Establishnationaland/orsub s ab s a o a a d/o sub nationaldisasterfunds
Mechanismforrapidfinancingof postdisasteroperations Securesfundexantethrough retentionanrisktransfer Conductstransparentandefficient damageassessmentofpublic g p assets Mobilizesimmediatefundingpost disaster Executes funding post disaster Executesfundingpostdisaster

Examples MexicosNationalDisasterFund e co s a o a sas e u d Emergencywindow Programforrehabilitationand reconstruction Trust

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Recommendation#4 Promoteprivatecatastropheriskinsurancemarkets
Optionsforconsideration Enablingregulationfor ab g egu a o o catastropheriskinsurance
Riskbasedsupervision

Developingriskmarket p g infrastructure
Productdesignandpricing Underwritingandclaimshandling Distributionchannels

Examples TurkishCatastropheinsurancePool Poolingpropertycatastrophe risksofprivatedwellings Nationalagriculturalinsurance schemeinIndia scheme in India Movingfrompublicpost disasterassistancetomarket basedcropinsurancethrough PPP

Facilitatingdisasterriskpooling
Facilitatingthepoolingand transferofnationaldisasterrisks f f i l di ik

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

Recommendation#5 Strengthenregionalcooperationondisasterrisk financingandinsurance

Optionsforconsideration Regionaldisasterrisk information,assessmentand modelingsystems Regionalcapacitybuilding programsandadvisoryservices Regionalvehiclestoleverage internationalreinsuranceand capitalmarkets Examples CaribbeanCatastropheRisk InsuranceFacility(CCRIF) SoutheasternEuropeandthe CaucasusCatastropheRisk InsuranceFacility(SEECCRIF) PacificDisasterRiskInsurance Program

ASEANDISASTERRISKFINANCING &INSURANCEFORUM

SummaryofoptionsforYOURconsideration
1. Developriskinformationandmodelingsystemsto assesstheeconomicandfiscalimpactofnatural disasters 2. Developdisasterriskfinancingandinsurance strategiesatthenationalandsubnationallevels t t i t th ti l d b ti ll l 3. Establishnationalandsubnationaldisasterfunds 4. Promoteprivatecatastropheriskinsurancemarkets 5. Strengthenregionalcooperationondisasterrisk financingandinsurance fi i di