The World Bank has revealed that its expanded Crisis Preparedness and Response Toolkit has a focus on offering increased protection against large-scale disasters, enabling the mobilisation of private capital and the ability to transfer the risks of high-intensity but low-frequency disasters to reinsurers and the capital markets.
Building on existing tools like catastrophe bonds, the Bank Group intends to offer countries the option to embed catastrophe bonds, insurance, and other risk management products into their bank financing operations.
Subsequently, eligible governments could then be eligible to access payout from an insurance mechanism in the event of a crisis, without having to take on more debt.
The approach aims to mobilize private capital and pass the risks to international reinsurance companies and the capital markets. Working with donors, the Bank Group is also aiming to ensure these insurance products are accessible to lower-income countries.
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