World Bank fully supportive of direct sovereign risk transfer: Bennett

ARTEMIS: The efforts of the World Bank around disaster risk financing for its members continues to be a real benefit, and while the organisation can and will do more, this isn’t about being the dominant force in the market, according to Michael Bennett, Head of Derivatives & Structured Finance, World Bank Treasury.

During last month’s annual ILS conference in New York City, held virtually for the first time owing to restrictions, Artemis spoke with Bennett about the World Bank’s use of reinsurance and insurance-linked securities (ILS) structures for member governments, and how this might evolve in the future.

So far, the World Bank has transferred some $4.5 billion of risk to the markets, of which the large majority (65%) has been via ILS structures; showing how beneficial capital markets-backed protection has been for both the organisation and its members.

FULL ORIGINAL PUBLICATION HERE

Cat bonds: Structurally diversifying & primed for growth, says Neuberger Berman

FULL ORIGINAL PUBLICATION HERE. COPY OF THE FULL WHITE PAPER HERE.

Catastrophe bonds and insurance-linked securities are one of the “very few genuinely, structurally diversifying asset classes,” according to the Neuberger Berman Insurance-Linked Strategies team, who give the asset class a positive outlook for 2021.

Writing in a white paper, the Insurance-Linked Strategies team of global asset manager Neuberger Berman explain that they also believe catastrophe bonds remain attractively valued and as an asset class is set to continue growing.

Catastrophe bonds, among the ILS universe, are particularly attractive to institutional investors, given they enable access to the returns of “a fundamentally uncorrelated asset class (natural catastrophe risk) in a form that is typically more liquid than most reinsurance contracts and vehicles,” the Neuberger Berman ILS team states.

World Bank has ‘only scratched the surface’ on what it can do: Bennett, ILS NYC 2021

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The World Bank has “only scratched the surface” on what it can do with member governments that are looking to transfer some of their disaster risk to the reinsurance sector and the capital markets, according to Michael Bennett, Head of Derivatives & Structured Finance, World Bank Treasury.

The World Bank is an international organisation with 189 member governments. Through the use of both traditional reinsurance and the issuance of catastrophe bonds, a sub-sector of the insurance-linked securities (ILS) space, it helps its members transfer disaster risk to the markets.

The focus of the Treasury Department of the World Bank is often the tail-end of a broader engagement with a given member designed to assess and quantify their disaster risk.

Catastrophe protection gap needs capital market support: Bernardino, EIOPA

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Gabriel Bernardino, the soon to retire Chairman of the European Insurance and Occupational Pensions Authority (EIOPA), has highlighted the capital markets role in delivering catastrophe insurance that has fewer protection gaps.

In an interview with Brink News, Bernardino explained the need for multi-peril catastrophe insurance and reinsurance coverage that protects against the uncovered portion of risks, such as non-damage business interruption related to a pandemic or other peril, just as much as physical property damage.

“I think there is a clear recognition from all parties, that the current situation — when we look at the coverage of business interruption — is far from optimal. It creates risks for the companies and reputational risks for the insurance market,” Bernardino explained.

ILS maturing nicely, but education still needed: Mayer Brown, ILS NYC 2021

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Overall, the insurance-linked securities (ILS) market is maturing in an attractive manner but as new sponsors and jurisdictions enter the fold, there’s a need for continued education, according to global law firm Mayer Brown.

The legal work in the ILS world is significant and critical in driving innovation and ensuring everything is in order, the way both sponsors and investors really need it to be.

Against this backdrop, the final day of our Artemis ILS NYC 2021 conference commenced with a discussion with three Partners from Mayor Brown, all of whom work on numerous ILS transactions and structures.

ESG opportunity can be meaningful for ILS: Nephila’s Schauble, ILS NYC 2021

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Today, there’s a significant amount of capital looking to be deployed in an environmental, social, and governance (ESG) friendly way, which represents a material opportunity for the insurance-linked securities (ILS) asset class, says Barney Schauble, Head of Labs at Nephila Advisors.

Day two of our fifth annual and first virtual ILS NYC conference, started with an exploration of ESG and the impact opportunity in the ILS market.

While the concept is nothing new, in more recent years, ESG factors have become a hot topic in risk transfer and as the understanding and adoption of such practices and compliance continues to expand, the opportunity is growing.

World Bank supports Central Asia Multi-Peril Risk Assessment

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Central Asian countries will benefit from a better understanding of their natural disaster risks, which in time could lead to greater use of risk transfer, insurance and reinsurance capacity in the region, as the World Bank supports a multi-peril risk assessment project for the region.

One of the first steps in moving towards sovereign disaster risk transfer, such as use of insurance, reinsurance or catastrophe bond type arrangements, tends to be in the development of risk modelling tools to enhance the understanding of exposures in a country.

To that end, the World Bank, alongside its partners, has launched an initiative to provide a multi-peril risk assessment of natural disaster risks, including earthquakes, floods and selected landslides within the Central Asia region.

Tre Hapa për të Ndihmuar Shqipërinë për të Përballuar Ndikimet Financiare të Shkaktuara nga Fatkeqësitë dhe Krizat

PUBLIKIMI I PLOT ORIGJINAL KTU

Në vitin 2019, Shqipëria u përball me një seri tërmetesh, ndër të cilët edhe një me magnitudë të lartë; më pas, mes përpjekjeve për rindërtim në vitin 2020, u godit edhe nga pandemia COVID-19. E përballur me nevojat e shumta në rritje, mbështetja e qeverisë shqiptare shkoi për të varfërit dhe personat e prekur nga fatkeqësitë dhe krizat, përfshirë këtu edhe bizneset. Për ta realizuar këtë, ajo shfrytëzoi rezervat fiskale, rishpërndau buxhetet për përparësitë urgjente dhe u mbështet tek ndihma e jashtme. Shumë nga këto masa u ndërmorën në bazë të nevojës.

Në shtator 2020, Banka Botërore së bashku me Ministrinë e Financave dhe Ekonomisë,  kreu vlerësimin diagnostikues në lidhje me financimin e riskut të fatkeqësive në Shqipëri.[1] Kjo përpjekje kishte për qëllim identifikimin e mangësive të financimit të mekanizmave për gatishmërinë financiare të vendit në rast fatkeqësish dhe rekomandimin e mënyrave për përmirësimin e tyre.

Menaxhimi i riskut të fatkeqësive është ndër përparësitë kryesore të politikave në Republikën e Shqipërisë dhe, pak kohë para tërmetit, qeveria shqiptare kreu edhe një seri reformash në këtë drejtim, si për shembull: miratimi i Ligjit të ri për Mbrojtjen Civile, racionalizimi i kornizave institucionale, decentralizimi i funksioneve që aktivizohen pas fatkeqësive dhe vënia në dispozicion e strukturave të nevojshme për fondet e emergjencës në nivel vendor dhe në nivel ministrie të linjës.

Can insurance-linked securities mobilize investment in climate adaptation?

ORIGINAL PUBLICATION HERE

The cost of adapting to climate change increases every year. Between now and 2030, adaptation in developing countries is projected to cost US$180 billion annually and skyrockets to US$280-500 billion as we get closer to 2050. The past five years are among the warmest ever recorded and the economic impacts from tropical storms, droughts and wildfires are reaching record levels around the world. Despite the need to improve our resilience, investments in early warning systems, climate resilient infrastructure, improved agriculture, natural capital such as mangroves and coral reefs, and water resource management, have remained stagnant. Adaptation finance still represents a fraction of overall climate finance and less than 20 percent of what is needed, even if absolute numbers are slowly rising US$22 to US$35 billion from 2016 to 2018).

But closing the gap between current adaptation financing levels and the need is a challenge. Public sector budgets are maxed out and attracting desperately needed private investment remains notoriously elusive. The challenge to mobilizing private investment into adaptation and resilience projects has always been–how do we get our money back? While we’ve been debating adaptation’s return on investment, the damages from intensifying hurricanes, wildfires, and droughts as a result of the climate crisis have cost hundreds of billions of dollars and displaced millions of people.

How to close Asia’s insurance protection gap

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Asia will drive the growth of the global insurance market in the years to come. Technological innovation along with solid financing and the right policies will be needed to make sure as many people as possible in the region get the insurance protection they need.

The demand for insurance in Asia in the coming decade will be shaped by rising household income levels of a rapidly expanding middle-class, policy measures to accelerate financial inclusion, and strengthening social protection and government insurance programs.

Governments are also increasingly making businesses, households, and individuals responsible for managing the adverse financial consequences of risks to assets, lives, incomes, and livelihoods.  One can, therefore, expect increased spending on buying protection and an expanding role for the insurance and capital markets to manage contingent liabilities better. The same holds for access to medical care, which will be spurring demand for health insurance.

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