The World Bank Group is moving ahead with a catastrophe insurance facility that would allow for rapid payouts to stricken countries similar to the programs targeting other natural hazards in Caribbean and Pacific Island nations.
“Our goal is to work with partners to create a financial instrument that rapidly disburses a large amount of funds within eight hours, not eight months, of an outbreak that meets certain objective criteria,” said World Bank President Jim Yong Kim at the Foreign Correspondents Club of Japan on Friday. “We must remember this important lesson from Ebola: We need to respond much more quickly to the next outbreak.”
The World Bank is “currently developing the concept of a pandemic emergency facility,” that would mimic existing programs like the Pacific Catastrophe Insurance Facility and the Caribbean Catastrophe Insurance Facility, Kim said. Both existing programs target natural hazards such as earthquake, tsunami, and tropical cyclone risk, but do not trigger payouts as the result of biological threats through epidemics or pandemics.
The World Bank expects to release details on this pandemic emergency facility proposal in the next few months, Kim added.
Pandemic risk financing is not a new concept, with private market players such as AXA and Scor Life having structured Mortality Catastrophe Bonds in the recent past. Modeling firms such as RMS have stated that extreme mortality bonds and the use of stochastic excess mortality models.
During his speech, the World Bank president cited the recent Ebola outbreak in West Africa as the reason for the development of a rapid payout facility.
“Once we recognized the severity of the epidemic, the World Bank Group committed more than $500 million quickly to the governments of Guinea, Liberia and Sierra Leone, to help finance their immediate response,” Kim explained. “But this money only started flowing about eight months after the outbreak began because we and the international community failed to recognize the urgency of the crisis.”