eugene n. gurenko, ph.d., cpcu, are lead insurance specialist · world bank group oecd conference...
TRANSCRIPT
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
OE
CD
Co
nfe
ren
ce o
n F
inan
cial
Man
agem
ent
of
Lar
ge-
Sca
le
Cat
astr
op
hes
Hyd
erab
ad, I
nd
ia
Dev
elo
pin
g C
atas
tro
ph
e In
sura
nce
Pro
gra
ms
in
Dev
elo
pin
g C
ou
ntr
ies:
Key
Ch
alle
ng
es a
nd
Op
po
rtu
nit
ies
Eug
ene
N. G
uren
ko, P
h.D
., C
PC
U, A
Re
Lead
Insu
ranc
e S
peci
alis
t
Feb
ruar
y 26
-27
, 200
7
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ag
end
a
Cat
astr
op
he
insu
ran
ce p
rog
ram
s in
dev
elo
pin
g c
ou
ntr
ies
A c
ase
stu
dy
of
the
Car
ibb
ean
Cat
astr
op
he
Insu
ran
ce
Fac
ility
Ap
plic
abili
ty o
f th
e C
CIF
exp
erie
nce
to
oth
er c
ou
ntr
ies.
Key
po
licy
issu
es a
nd
rec
om
men
dat
ion
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ag
end
a
Cat
astr
op
he
insu
ran
ce p
rog
ram
s in
dev
elo
pin
g c
ou
ntr
ies
A c
ase
stu
dy
of
the
Car
ibb
ean
Cat
astr
op
he
Insu
ran
ce
Fac
ility
Ap
plic
abili
ty o
f th
e C
CIF
exp
erie
nce
to
oth
er c
ou
ntr
ies.
Key
po
licy
issu
es a
nd
rec
om
men
dat
ion
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Maj
or
sou
rces
of
dis
aste
r fi
nan
ce
0
10
00
0
20
00
0
30
00
0
40
00
0
50
00
0
60
00
0
70
00
0
80
00
0
$ m
m
19
87
-1
98
9a
vera
ge
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Fin
anc
ing
of
cata
str
op
he
lo
sse
s in
de
ve
lop
ing
co
un
trie
s
Em
erg
en
cy
re
lief
aid
Ins
ure
d l
os
sR
eta
ine
d l
os
s
•On
ave
rag
e, 9
2,6%
of
eco
no
mic
loss
was
ret
ain
ed b
y d
evel
op
ing
co
un
trie
s.
Sou
rces
: OE
CD
, Mun
ich
Re
•Los
s re
tent
ion
was
on
aver
age
$31
bnpe
r ye
ar
•Los
s re
tent
ion
has
been
high
ly v
aria
ble
–50
%
coef
ficie
nt o
f var
iatio
n
Cat
astr
ophe
insu
ranc
e in
dev
elop
ing
coun
trie
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Cat
astr
op
he
insu
ran
ce p
enet
rati
on
in d
evel
op
ing
co
un
trie
s (%
dw
ellin
gs
cove
red
)
% h
om
es c
ove
red
Indi
a –
unde
r 0.
3%
Phi
lippi
nes
–0.
3%
Iran
–un
der
0.05
%
Rom
ania
–un
der
4% Bul
garia
–un
der
3% Chi
na –
unde
r 0.
5%
Tur
key
–18
%
051015
020
040
060
080
01,
000
1,20
0GD
P/ C
apita
$US
Premium/ Capita $US
Vie
tnam
Indi
aIn
done
sia
Chi
na
Phili
ppin
es
Glo
bal I
ndic
ator
PER
SON
AL
INSU
RA
NC
E P
RE
MIU
M =
1.3
*(G
DP/
1000
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PER
SON
AL
CA
T I
NSU
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NC
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MIU
M =
0.1
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Cat
astr
ophe
insu
ranc
e in
dev
elop
ing
coun
trie
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Key
Ch
alle
ng
es:
Des
ign
Sta
ge
Lac
k o
f in
sura
nce
cu
ltu
re a
nd
ris
k aw
aren
ess.
Lo
w in
com
e o
f p
op
ula
tio
n.
An
(al
mo
st)
no
n-e
xist
ent
fun
ctio
n o
f fo
rmal
inte
gra
ted
cata
stro
ph
e ri
sk m
anag
emen
t in
clu
sive
of
risk
red
uct
ion
an
d
risk
fin
anci
ng
.
Lac
k o
f ri
sk m
anag
emen
t cu
ltu
re a
nd
insu
ran
ce e
xper
tise
in
rele
van
t g
ove
rnm
ent
inst
itu
tio
ns.
Po
litic
al r
esis
tan
ce t
o s
wit
ch f
rom
dis
cret
ion
al g
ove
rnm
ent
po
st-d
isas
ter
assi
stan
ce t
o c
on
trac
tual
(in
sura
nce
).
Lac
k o
f co
nfi
den
ce o
n t
he
par
t o
f th
e in
sura
nce
sec
tor
and
civi
l so
ciet
y in
go
vern
men
t’s
abili
ty t
o c
reat
e a
fin
anci
ally
effi
cien
t an
d t
ran
spar
ent
insu
ran
ce p
rog
ram
.
En
tren
ched
or
oft
en d
iver
gin
g e
con
om
ic in
tere
sts
Dis
ince
nti
ves
to in
sure
pro
vid
ed b
y u
nco
nd
itio
nal
po
st-
dis
aste
r d
on
or
aid
.
Cat
astr
ophe
insu
ranc
e pr
ogra
ms
in d
evel
opin
g co
untr
ies
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Key
Ch
alle
ng
es:
Imp
lem
enta
tio
n S
tag
e (b
ased
on
exp
erie
nce
of
TC
IP, R
CIP
, CC
IF, G
CR
F)
Co
un
try
leve
l:
Pas
sin
g r
elev
ant
insu
ran
ce le
gis
lati
on
.
Rai
sin
g in
sura
nce
an
d r
isk
awar
enes
s o
f p
op
ula
tio
n.
En
suri
ng
th
e su
pp
ort
an
d p
arti
cip
atio
n o
f in
sura
nce
/rei
nsu
ran
ce
ind
ust
ry in
th
e o
per
atio
n o
f a
sch
eme.
Mai
nta
inin
g a
deq
uat
e g
ove
rnm
ent
com
mit
men
t to
th
e p
rog
ram
.
Pro
gra
m-l
evel
Saf
egu
ard
ing
th
e su
rplu
s ac
cum
ula
ted
in t
he
po
ol f
rom
“p
olit
ical
hija
ckin
g”
and
en
suri
ng
it is
wel
l man
aged
.
Pu
ttin
g in
pla
ce a
nd
imp
lem
enti
ng
an
ad
equ
ate
risk
man
agem
ent
fram
ewo
rk f
or
the
pro
gra
m (
incl
ud
ing
acc
ess
to r
ein
sura
nce
).
En
suri
ng
ad
equ
ate
pri
cin
g o
f ri
sk c
ove
rag
e.
Cat
astr
ophe
insu
ranc
e pr
ogra
ms
in d
evel
opin
g co
untr
ies
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ag
end
a
Cat
astr
op
he
insu
ran
ce p
rog
ram
s in
dev
elo
pin
g c
ou
ntr
ies
A c
ase
stu
dy
of
the
Car
ibb
ean
Cat
astr
op
he
Insu
ran
ce
Fac
ility
Ap
plic
abili
ty o
f th
e C
CIF
exp
erie
nce
to
oth
er c
ou
ntr
ies.
Key
po
licy
issu
es a
nd
rec
om
men
dat
ion
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
CC
RIF
: A
n In
sura
nce
Veh
icle
Res
erve
s
Rei
nsu
ran
ce/A
RT
(Pu
rch
ased
on
inte
rnat
ion
al
fin
anci
al m
arke
ts)
Co
un
try
2
Co
un
try
3
Co
un
try
1
Co
un
try
4
Co
un
try
5
Co
un
try
6
Co
un
try
7
Pre
miu
mP
ayo
ut
Insu
ran
ce
Pay
ou
t
Insu
ran
ce
Pre
miu
m
Init
ial d
on
or
con
trib
uti
on
Su
rplu
s fr
om
gro
wth
CC
RIF
will
pro
vid
e th
e C
arib
bea
n g
ove
rnm
ents
wit
h p
aram
etri
c ca
tast
rop
he
insu
ran
ce c
ove
rag
e, t
hu
s en
ablin
g t
hem
to
ove
rco
me
a ty
pic
al li
qu
idit
y cr
un
ch
in t
he
afte
rmat
h o
f a
dis
aste
r.
A c
ase
stud
y of
the
Car
ibbe
an In
sura
nce
Fac
iliity
Sou
rce:
Fra
ncis
Ghe
squi
re, W
orld
Ban
k, 2
006
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
CC
RIF
: Org
aniz
atio
nal S
truc
ture
Bo
ard
of
Dir
ecto
r(W
B/D
on
or/
Clie
nt)
Ass
etM
anag
er(R
eser
ves)
Cap
tive
Man
ager
Res
po
nsi
ble
fo
r A
dm
inis
trat
ive/
Fid
uci
ary/
L
egal
Asp
ects
Fac
ility
S
up
ervi
sor
(Ris
k M
anag
er)
Rei
nsu
ran
ce/A
RT
(Pu
rch
ased
on
inte
rnat
ion
al
fin
anci
al m
arke
ts)
A c
ase
stud
y of
the
Car
ibbe
an In
sura
nce
Fac
iliity
Sou
rce:
Fra
ncis
Ghe
squi
re, W
orld
Ban
k, 2
006
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Div
ersi
ficat
ion
bene
fits
from
reg
iona
l ris
k po
olin
g
Prem
ium
Cos
t as
Mul
tiple
of A
vera
ge A
nnua
l Los
s
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G r e n a d a
D o m i n i c a
S t . K i t t s a n dN e v i s
S t . V i n c e n ta n d t h e
G r e n a d i n e s
S a i n t L u c i a
A n t i g u a a n dB a r b u d a
B a r b a d o s
J a m a i c a
AAL
Indi
vidua
l
CCRI
F 0
CCRI
F 40
Sou
rce:
Fra
ncis
Ghe
squi
re, W
orld
Ban
k, 2
006
A c
ase
stud
y of
the
Car
ibbe
an In
sura
nce
Fac
ility
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Key
ch
alle
ng
es f
aced
by
the
CC
IF:
Des
ign
sta
ge
Mas
terin
g su
ppor
t for
the
proj
ect w
ithin
Wor
ld B
ank
Inte
rnal
rev
iew
s, m
anag
emen
t sup
port
, len
ding
in s
uppo
rt o
f
prem
ium
.
Ens
urin
g co
untr
ies’
com
mitm
ent a
nd p
artic
ipat
ion
in th
e
prog
ram
prem
ium
pay
men
t, te
rms
of c
over
age,
ow
ners
hip
of s
urpl
us, a
nd
term
inat
ion
fees
.
Ens
urin
g do
nor
supp
ort t
o th
e pr
ogra
mfe
asib
ility
stu
dies
, pro
gram
cap
italiz
atio
n an
d w
orki
ng c
apita
l
Sec
urin
g su
ppor
t of t
he g
loba
l rei
nsur
ers
Pro
gram
man
agem
ent,
risk
tran
sfer
A c
ase
stud
y of
the
Car
ibbe
an In
sura
nce
Fac
ility
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Key
ch
alle
ng
es f
aced
by
the
CC
IF:
Imp
lem
enta
tio
n s
tag
e
Mai
ntai
ning
cou
ntrie
s’ in
tere
st a
nd p
artic
ipat
ion
in th
e pr
ogra
m.
Fin
ding
the
right
bal
ance
bet
wee
n pr
ovid
ing
affo
rdab
le c
over
age
and
ensu
ring
finan
cial
sus
tana
bilit
yof
the
prog
ram
.
Impl
emen
ting
adeq
uate
ris
k m
anag
emen
t.R
isk
rete
ntio
n, r
isk
tran
sfer
, sur
viva
l pro
babi
lity.
Ens
urin
g co
ntin
uous
sup
port
of r
eins
urer
s.
Ach
ievi
ng a
sou
nd fi
nanc
ial a
nd o
pera
tiona
l man
agem
ent o
f the
faci
lity.
A c
ase
stud
y of
the
Car
ibbe
an In
sura
nce
Fac
ility
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ag
end
a
Cat
astr
op
he
insu
ran
ce p
rog
ram
s in
dev
elo
pin
g c
ou
ntr
ies
A c
ase
stu
dy
of
the
Car
ibb
ean
Cat
astr
op
he
Insu
ran
ce
Fac
ility
Ap
plic
abili
ty o
f th
e C
CIF
exp
erie
nce
to
oth
er c
ou
ntr
ies.
Key
po
licy
issu
es a
nd
rec
om
men
dat
ion
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Mai
nst
ream
ing
CC
RIF
The
con
cept
of r
egio
nal r
isk
pool
ing
can
be a
pplie
d to
oth
er
part
s of
the
wor
ld –
the
Pac
ific
Isla
nds,
for
inst
ance
;
Indi
vidu
al c
ount
ry r
isk
asse
ssm
ents
sho
uld
be c
arrie
d ou
t firs
t.
Can
CC
RIF
be
exte
nded
to c
over
oth
er la
rger
dev
elop
ing
coun
trie
s?G
over
nanc
e is
sues
.
Cap
italiz
atio
n/si
ze o
f ris
ks c
over
ed.
Use
of p
ublic
sub
sidi
es.
App
licab
ility
of C
CR
IF to
oth
er c
ount
ries
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ben
efit
s o
f g
lob
al r
isk
po
olin
g:
Glo
bal
Cat
astr
op
he
Insu
ran
ce F
acili
ty
•27
cou
ntr
ies
•2 p
erils
0.00
%
0.50
%
1.00
%
1.50
%
2.00
%
2.50
%
3.00
%
3.50
%
4.00
%
4.50
%
Co
un
trie
sR
egio
ns
Po
rtfo
lio
Premium/Insured Limit
App
licab
ility
of C
CR
IF to
oth
er c
ount
ries
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ag
end
a
Cat
astr
op
he
insu
ran
ce p
rog
ram
s in
dev
elo
pin
g c
ou
ntr
ies
A c
ase
stu
dy
of
the
Car
ibb
ean
Cat
astr
op
he
Insu
ran
ce
Fac
ility
Ap
plic
abili
ty o
f th
e C
CIF
exp
erie
nce
to
oth
er c
ou
ntr
ies.
Key
po
licy
issu
es a
nd
rec
om
men
dat
ion
s
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Lo
w c
ost
of
IBR
D c
apit
al
Pu
blic
p
olic
ies
Pub
lic r
isk
awar
enes
s,
educ
atio
n ca
mpa
igns
Sov
erei
gn c
atas
trop
he
risk
cove
rage
(M
exic
o bo
nd, C
arib
bean
Cat
F
acili
ty, G
CIF
)
Mak
ing
insu
ranc
e co
mpu
lsor
y or
se
mi-c
ompu
lsor
y (T
urke
y/R
oman
ia/C
olum
bia/
Fra
nce
);
Cre
atio
n of
nat
iona
l poo
ls;
Dra
win
g a
clea
r lin
e be
twee
n pu
blic
and
priv
ate
liabi
litie
s (S
pain
)
En
ablin
g p
ub
lic p
olic
ies
for
cata
stro
ph
e in
sura
nce
Mak
ing
cata
stro
phe
rein
sura
nce
capa
city
mor
e af
ford
able
for
deve
lopi
ng c
ount
ries
thro
ugh
(i)
glob
al m
utua
lisat
ion
of r
isk;
(ii)
pa
rtia
l ris
k re
tent
ion;
(iii
) pr
emiu
m
subs
idie
s to
poo
rest
nat
ions
; (iv
) su
bsid
ies
for
mar
ket i
nfra
stru
ctur
e an
d pr
oduc
t dev
elop
men
t
Key
pol
icy
issu
es a
nd r
ecom
men
datio
ns
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Fin
din
g t
he
rig
ht
fit
bet
wee
n p
ub
lic a
nd
pri
vate
ris
k fi
nan
cin
g
in c
ase
of
nat
ura
l dis
aste
rs
Loss
Exceedance probability
p
L
p
L
Reso
urce
gap
Insu
red
Insu
ranc
e
Re-
insu
ranc
e
Cap
ital m
arke
t
Don
ors
Gov
ernm
ents
M
FIs
Avo
idin
g t
he
dis
tort
ion
of
pri
vate
ris
k m
arke
ts s
ho
uld
be
the
ove
rarc
hin
g
con
cern
of
afo
rem
enti
on
ed p
ub
lic p
olic
ies
Key
pol
icy
issu
es a
nd r
ecom
men
datio
ns
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Ach
ievi
ng
co
mp
limen
tari
ty b
etw
een
do
no
r su
pp
ort
ed
pro
gra
ms
in c
atas
tro
ph
e ri
sk in
sura
nce
an
d t
he
mar
ket
Avo
id th
e di
stor
tion
of r
isk
mar
kets
by
ensu
ring
that
don
or
supp
orte
d ca
tast
roph
e in
sura
nce
prog
ram
s:F
ollo
w (
not l
ead)
glo
bal r
eins
urer
son
pric
e;
Dea
l with
new
mar
ket s
egm
ents
(go
vern
men
ts, o
r de
man
d fr
om
hous
ehol
ds/S
ME
sdu
e to
gov
ernm
ent-
polic
y ac
tions
; new
prod
ucts
–e.
g., 3
yea
r co
ntra
cts)
.
Pro
vide
dire
ct p
rem
ium
sub
sidy
(no
t cap
ital)
ON
LY to
the
poor
est
coun
trie
s/so
cial
str
ata
Lim
it su
bsid
ies
to p
rodu
ct a
nd m
arke
t inf
rast
ruct
ure
deve
lopm
ent
Adh
ere
to c
ompe
titiv
e bi
ddin
g on
ALL
(pr
emiu
m a
nd p
rodu
ct
deve
lopm
ent)
sub
sidi
es p
rovi
ded
by d
onor
s to
mar
ket –
“NO
mon
opol
y lic
ense
s!”
See
k be
tter
coun
try
com
mitm
ent t
o ex
-ant
e ris
k fin
anci
ng in
prov
idin
g po
st-d
isas
ter
dono
r ai
d.
Key
pol
icy
issu
es a
nd r
ecom
men
datio
ns
Wor
ld B
ank
Gro
upW
orld
Ban
k G
roup
Co
ncl
usi
on
s
Cat
astr
ophe
ris
k po
olin
g at
the
natio
nal,
regi
onal
and
glo
bal
leve
l in
deve
lopi
ng c
ount
ries
resu
lts in
con
side
rabl
e
dive
rsifi
catio
n be
nefit
s th
at c
an r
esul
t in
impr
oved
affo
rdab
ility
of in
sura
nce
cove
rage
.
Cat
astr
ophe
ris
k fin
anci
ng w
ith p
rivat
e se
ctor
par
ticip
atio
n
shou
ld b
ecom
e an
impo
rtan
t par
t of d
onor
dis
aste
r-re
late
d ai
d
prog
ram
s.
Cre
atio
n of
PP
Ps
in r
isk
finan
cing
sho
uld
com
plem
ent r
athe
r
than
dis
tort
priv
ate
risk
mar
kets
.
Dev
elop
men
t of i
nstit
utio
nal c
atas
trop
he r
isk
man
agem
ent
capa
city
at t
he c
ount
ry le
vel s
houl
d in
clud
e a
risk
finan
cing
func
tion.
Key
pol
icy
issu
es a
nd r
ecom
men
datio
ns