Broader set of potential losses covered
WASHINGTON, March 24, 2015—The World Bank today announced the expansion of the menu of eligible instruments to transact with clients to manage disaster risk. The enhanced flexibility also broadens the definition of disaster risks from those related to meteorological and geological events, to now include pandemics, epidemics and other events affecting health issues such as morbidity, mortality and longevity.
Previously, the Bank could only offer member countries coverage in the form of derivatives. Now, the range of instruments has been expanded to include insurance and re-insurance contracts and other similar mechanisms. The World Bank has played an important role in developing the market for disaster risk transfer with 18 transactions worth $1.4 billion in coverage to date.
“This additional flexibility will allow the Bank to better respond to client needs by continuing to enhance what we can offer in our role as intermediary with the markets,” said World Bank Vice President and Treasurer, Madelyn Antoncic. Our participation in what ultimately becomes a risk transfer transaction provides an important demonstration effect to crowd in the private sector as risk takers.”
Engaging with the World Bank has a number of advantages. Clients benefit by leveraging private sector risk capital to manage the financial impact of natural disasters and other catastrophic events and by making use of the World Bank’s technical expertise, convening power and standing in the financial markets. World Bank intermediation also provides protection to the client against the credit risk of a private sector counterparty. Eligible clients include client countries, their sub-national entities and regional and international organizations.
The World Bank is a global leader in disaster risk management providing customized support to client countries to assess exposure to vulnerabilities and address disaster risks. It also provides technical and financial support for risk assessments, risk reduction, preparedness, financial protection, and resilient recovery and reconstruction.
