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Insurance-linked securities (ILS) are well positioned to meet emerging demand from the ECIS region (Western Balkans, Southern Caucasus, Eastern Europe and Central Asia), although certain challenges must be addressed in order to stimulate issuance, according to global catastrophe risk modeller, RMS.

Artemis recently spoke with RMS’ Global Managing Director, Daniel Stander, and a consultant in RMS’ Capital and Resilience Solutions Practice, Conor Meenan, on the sidelines of the recent UNDP disaster risk financing conference in Istanbul. The focus: the potential for and the benefits of disaster risk reduction (DRR) and disaster risk financing (DRF) across the ECIS markets.

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The Caribbean island nation of Haiti is to benefit from a small payout from the CCRIF SPC (formerly called the Caribbean Catastrophe Risk Insurance Facility), after a recent magnitude 5.9 earthquake on October 6th activated its aggregate deductible coverage under the facility.

The M 5.9 earthquake struck Haiti resulting in the deaths of roughly 30 persons, injuring many more and destroying some houses. Infrastructure damage was said to have been relatively minor.

While this was not a particularly impactful earthquake compared to those Haiti has experienced before, the country will still benefit from a payment from the CCRIF SPC thanks to the introduction of the aggregate deductible coverage (ADC).

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The World Bank, alongside German and United Kingdom governments, have announced a new initiative to help vulnerable countries manage climate change and natural disaster related shocks, with the launch of the US $145 million Global Risk Financing Facility (GRiF).

Announced at the World Bank and IMF Annual Meetings in Bali in recent days, the Global Risk Financing Facility (GRiF) is a vehicle to provide financing to set disaster risk finance and insurance mechanisms that can help governments to have the funding required to aid recovery from disasters and to deliver money to those who most need it.

The facility will help to establish more disaster risk insurance pools such as the CCRIF in the Caribbean and PCRAFI in the Pacific, aiming to ensure more people who are exposed to climate change and natural disaster losses can access the fast liquidity that parametric facilities can deliver.

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The government of the Philippines is once again discussing the issuance of catastrophe bonds with the support of the World Bank, as it looks to the capital markets to secure insurance and reinsurance capacity to provide contingent financing for recovery from major natural disasters. The Philippines has been involved in almost annual discussions on this topic for at least 8 years, we first wrote about its ambitions to leverage the catastrophe bond structure for disaster risk transfer back in 2010.

These discussions have been affected in the past by political transitions in the country and the Philippines did get quite far down the line in its cat bond discussions in 2015, but no transaction came to market.

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The main rating agencies for the insurance and reinsurance sector all agree that the insurance-linked securities (ILS) market and alternative capital is set to grow in importance, scope and overall in size.

ILS market and alternative reinsurance capital growth has been steady over the last decade, but has accelerated since the losses of 2017, as the market recapitalised rapidly to support client needs and the total amount of capital under management at ILS funds we track at Artemis reached $102.8 billion in recent weeks.

In fact, if you add in all of the alternative capital that we cannot track (all sidecar capital, private quota shares etc), we would estimate the total amount at likely nearing $110 billion, as of this time. Add in the other ways institutional pension investors access insurance linked returns more directly and you could get closer to $150 billion.

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ОРИГИНАЛЬНАЯ ПУБЛИКАЦИЯ ЗДЕСЬ

Жертвами природных катаклизмов за последние 20 лет стали 1,3 млн человек. А 4,4 млрд получили увечья, лишились крыши над головой или были вынуждены искать пристанища в других местах. При этом мало кто учитывает экономический ущерб от стихийных бедствий, который, по оценкам, вырос в два с половиной раза и составляет 2,9 трлн долларов. Об этом говорится в новом докладе Управления ООН по снижению риска бедствий (УСРБ) об экономических последствиях природных бедствий.

Авторы доклада проанализировали данные с 1998 по 2017 год и выяснили, что вероятность погибнуть в результате природных катастроф у жителей бедных стран в семь раз выше, чем у граждан богатых государств, а риск получить физические травмы, потерять жилье или стать вынужденным переселенцем там выше в шесть раз.

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Risk is part and parcel of development, entwined with development and inseparable from that development. Increasingly it is recognized that an understanding and management of risk is what makes development truly sustainable.

Over two days in Istanbul, UNDP hosted one of its first ever major events on the financing of risk transfers, and together with our partners in industry, the multilateral sector and governments, we worked to consider the options, tools and products that countries have to reduce and transfer risk across the Eurasia region. Key throughout was the acknowledgement that financing the management of risk is core to the future of all countries.

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The CCRIF SPC (formerly called the Caribbean Catastrophe Risk Insurance Facility), the parametric disaster insurance facility serving the Caribbean and Central America, is set to make its first payout of the 2018/2019 policy year to Barbados of more than $5.8 million following the passage of Tropical Storm Kirk.

Heavy rainfall that occurred during the passage of Tropical Storm Kirk has resulted in Barbados receiving a payout on its parametric Excess Rainfall insurance policy of $5.813 million (roughly BDS$11.6 million), the sixth payout the country has now received from the CRRIF SPC.

Barbados has been a member of the CCRIF SPC since its establishment in 2007, and the latest payment takes its total payouts to more than $19.3 million from six events.

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GENEVA, 10 October 2018 – The last twenty years have seen a dramatic rise of 151% in direct economic losses from climate-related disasters, according to a report released today by the UN Office for Disaster Risk Reduction in advance of International Day for Disaster Reduction on October 13.

In the period 1998-2017, disaster-hit countries reported direct economic losses of US$2,908 billion of which climate-related disasters accounted for US$2,245 billion or 77% of the total.

This compares with total reported losses for the period 1978-1997 of US$1,313 billion of which climate-related disasters accounted for US$895 billion or 68%.

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Multi-cat bonds or other ILS solutions are the only viable solution for coping with natural disasters in the Eastern European and Commonwealth of Independent States region, and Bermuda could have a big role to play in making this happen, says Kirill Savrassov, chief executive of Bermuda-based Phoenix CRetro Reinsurance.

The human cost of natural disasters is measured not just in the deaths and injuries they cause, but also in terms of their lasting economic impact on survivors and countries. Natural disasters don’t just destroy homes and fields; they can altogether annihilate years of economic growth.

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