20140828 IDRC WB Session Esther Baur

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5th International Disaster and Risk Conference IDRC 2014 Integrative Risk Management - The role of science, technology & practice 24-28 August 2014 in Davos, Switzerland

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20140828 IDRC WB Session Esther Baur

  1. 1. Is financial protection worth it? Evaluation and evidence of sovereign disaster risk financing and insurance Esther Baur, Director, Global Partnerships IDRC Davos 2014
  2. 2. Closing the protection gap: efforts required on all fronts Risk transfer solutions for (sub)sovereigns to cover their direct or indirect costs National insurance schemes & pools to increase insurance penetration 2 Esther Baur - IDRC Davos 2 economic loss Foregone revenues Damaged uninsured private assets gap Damaged public physical assets Clean up costs Livelihood assistance, rehabilitation of the poor Microinsurance distributed via aggregators such as MFIs, NGOs, and corporates Emergency relief insured loss Role of the private sector: assess, quantify, price risks, design risk transfer products, assume the risk through risk transfer, handle claims
  3. 3. Examples of innovative risk transfer solutions Beijing Agricultural risk Earthquake and tropical Vietnam Pacific Islands cyclone risk Agriculture yield cover Esther Baur - IDRC Davos Kenya Drought insurance for seed growers Uruguay Energy production shortfalls due to drought India Weather insurance for farmers Caribbean Hurricane and earthquake risk 3 Turkey Earthquake pool Mexico Earthquake/hurricane and livestock risk Ethiopia/Senegal Crop insurance for small scale farmers Bangladesh Meso flood insurance African Risk Capacity Government drought insurance pool (Mauritania, Senegal, Kenya, Niger Mozambique) Haiti/Central America: Micro catastrophe insurance Europa Re
  4. 4. Esther Baur - IDRC Davos Benefits of a sovereign risk transfer  Guaranteed access to required funds for recovery, up to agreed cover limits  Diversifies funding to cope with financial consequences of natural catastrophes  Speedy delivery, especially with innovative instruments such as parametric solutions  Budget planning certainty (steady premiums vs highly volatile disaster expenses)  No payback obligation (in contrast to loans)  Reduction of a country’s contingent liabilities to acceptable levels (positive implications for sovereign rating and currency)  Reduced stress in crisis situation to divert own funds from other projects to affected areas  Price tag on risks allows to compare cost-benefits of different prevention measures  Synergies for emergency planning and prevention (same assumptions /scenarios for intervention planning) 4
  5. 5. Esther Baur - IDRC Davos 5
  6. 6. Esther Baur - IDRC Davos Legal notice 6 ©2014 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.

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