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

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. 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
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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. 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. 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)
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5. Esther Baur - IDRC Davos 5

6. Esther Baur - IDRC Davos
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