Technical Discussion Paper on Concessional Insurance
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...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/269661546940030294/Technical-Discussion-Paper-on-Concessional-Insurance http://hdl.handle.net/10986/31217 |
| Summary: | 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. |
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