Insuring Public Finances Against Natural Disasters: A Survey of Options and Recent Initiatives
IMF Working Papers, August 1, 2006
Source details
- Canonical URL
- Insuring Public Finances Against Natural Disasters: A Survey of Options and Recent Initiatives
Other formats
Bibliographic details
- Authors: David J Hofman, Patricia A Brukoff
- Published: August 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864595.001
Executive summary and central findings
- Natural disasters can put severe strain on public finances, in particular in developing and small countries.
- Catastrophe insurance markets increasingly offer opportunities for the transfer of such risks.
- Thus far, developing countries have only tepidly begun to tap these opportunities.
- More frequent and intensive use of insurance markets may be desirable because it could help introduce an important element of predictability in the post-disaster public finances of disaster-prone developing countries.
- The paper surveys the various available insurance modalities and reviews recent initiatives in developing and emerging market countries.
- The paper identifies some key challenges for the insurance community, donors, and international financial institutions (IFIs).
Survey scope, modalities, and thematic coverage
- Focus on catastrophe insurance markets and modalities for transferring disaster risk from public finances to insurance/reinsurance and capital markets.
- Reviews recent initiatives in developing and emerging market countries (no specific initiatives or country lists are provided on this page).
- Subject headings listed: Bonds, Environment, Financial institutions, Financial markets, Insurance, Insurance companies, International capital markets, Natural disasters.
- Keywords listed: bond issue, Bonds, Caribbean, catastrophe insurance pricing, disaster insurance scheme, disaster risk solution, disaster-insurance modality, earthquake insurance scheme, index insurance contract, insurance, Insurance companies, insurance coverage, International capital markets, market penetration, Natural disasters, public finances, reinsurance company, WP.
Policy implications and challenges identified
- Greater use of insurance markets could introduce predictability into post-disaster public finances for disaster-prone developing countries.
- Developing countries have been slow to adopt catastrophe insurance solutions, implying a gap between available market instruments and sovereign uptake.
- Key challenges are identified for:
- the insurance community (product design, pricing, market penetration),
- donors (supporting market development and capacity building),
- international financial institutions (advisory, facilitation, possible financing roles).