Disaster insurance on agenda in the Pacific

Tuesday March 25, 2014 Written by Published in Weather
Broken power poles and light standards on Hua’pai after Cyclone Ian went through in January. Tonga Power photo. 14032429 Broken power poles and light standards on Hua’pai after Cyclone Ian went through in January. Tonga Power photo. 14032429

NUKU’ALOFA.— Representatives of the Cook Islands, Fiji, Samoa, Tonga, and Vanuatu attended a regional workshop last week in Tonga to discuss the future of Disaster Risk Financing and Insurance (DRFI) in the region.

Participants acknowledged the great progress made in consolidating the Pacific DRFI programme to date, as four participating countries (Cook Islands, Samoa, Tonga, and Vanuatu) discussed their experiences in using new financial tools that have been developed to improve post disaster financial response.

Tonga specifically shared its experiences in accessing post-disaster budget support under the innovative Pacific Catastrophe Risk Insurance Pilot. Earlier this year the country became the first to benefit from a pay-out under the regional pilot following Tropical Cyclone Ian, which swept across the Ha’apai island group on January 11-12, triggering a rapid payment of US $1.27 million to support recovery.

“Our government received the US$1.27 million payment from the Pacific Catastrophe Risk Insurance Program only two weeks after the cyclone hit,” said Samiu Vaipulu, Tonga’s Deputy Prime Minister. “This injection of liquidity played a key role in ensuring that the government could respond swiftly to the most pressing needs of those affected by the cyclone”.

Six Pacific island countries – Tonga, Cook Islands, Marshall Islands, Samoa, Solomon Islands and Vanuatu – are currently participating in the Pacific Catastrophe Risk Insurance Pilot. Launched in January 2013, the pilot tests a risk transfer arrangement modelled on an insurance plan, and uses “ “ such as cyclone intensity or earthquake magnitude to determine pay-outs, which allows for quick disbursements (usually within three weeks of a disaster occurring).

“Tonga’s experience demonstrates the important role that the private sector can play through the provision of catastrophe risk insurance, to rapidly provide an injection of cash in the immediate aftermath of a disaster,” said Franz Drees-Gross, Country Director for the Pacific Islands at the World Bank. “This is one tool that can be used to help countries prepare for the impact of natural disasters which, as we well know, are all too frequent occurrences in the Pacific region.”

He added: “This workshop provided Pacific Island countries with a critical opportunity to have dedicated discussions on the future of the Pacific Disaster Risk Financing Initiative and guide its future direction in the region, including how it might be continued and expanded over the years ahead."

The workshop was designed to facilitate peer exchange and provide technical guidance for the future of the Pacific Disaster Risk Financing and Insurance (DRFI) pilot programme which is scheduled to be discussed at this year’s Forum Economic Ministers’ Meeting (FEMM). The workshop was co-convened by SPC/SOPAC and the World Bank. PCRAFI is co-financed by the Government of Japan, the Global Facility for Disaster Reduction and Recovery (GFDRR), and the ACP/EU Natural Disaster Risk Reduction Programme. - Release

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