Global Health Risk Framework Pandemic Financing: Workshop Summary (2016) / Chapter Skim
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4 Adapting Insurance Products for Pandemic Risk
4 Adapting Insurance Products for Pandemic Risk
Pages 19-26
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From page 19... ...
Parametric insurance pays a set sum against a discrete trigger, reducing the insurers' admin istrative burden. (da Victoria Lobo, Young)
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From page 20... ...
Even with insurance for hurricanes, which hit Caribbean countries on a fairly predictable basis, enthusiasm for paying the premium tends to ebb a few years after a serious storm. Olivier Mahul of the World Bank built on this point.
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From page 21... ...
As part of the process to establish the credit, the World Bank worked with the Sri Lankan finance ministry to invest in disaster mitigation measures. The bank can guarantee that funds be made available after a disaster, but the strategy behind that funding is important.
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From page 22... ...
Quantifying pandemic risk requires data that might not be available, and he suggested that an independent source of infection and death rates for known pathogens would be needed for the risk analysis. For the nine current member countries Young works with in ARC, the process of quantifying risk starts with a 12- to 18-month contingency planning and risk analysis process, where they work with ARC staff and other experts, including the World Bank, on understanding the benefits of insurance.
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From page 23... ...
He felt that the industry was at the point now where parametric products could be adapted to pandemic risks; though he was not free to share all the information backing his position, he emphasized the feasibility of the tool. Aside from the ease of the claims process, da Victoria Lobo saw value in the incentives inherent in insurance.
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From page 24... ...
He saw the World Bank's role as helping governments make this calculation, to enable them to stand in their parliaments and guarantee that they will have the necessary money in the event of a disaster. Da Victoria Lobo agreed, discussing the distinction between insurance and banking products.
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From page 25... ...
At the same time, Adam Bornstein of the Global Fund cautioned against overselling the value of pandemic insurance as a hedge for risk in the life insurance market, as people in poor countries do not generally have life insurance. He and Staci Warden of the Milken Institute agreed that it is very difficult to get governments to pay premiums to hedge risks against shocks.
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