The future of disaster risk pooling for Developing Countries: where do we go from here?
Climate-related disasters are increasing in frequency and severity and both economic and human losses are climbing. Unfortunately, developing countries, which are the least equipped to deal with disasters, are often impacted the most. Over the past two decades, new financial tools have emerged to help developing countries cope with disaster. Sovereign parametric insurance is one of these tools and remains a key part of the disaster risk finance architecture. Three regional risk pools have been developed to provide sovereign parametric insurance to developing countries: CCRIF SPC (CCRIF), the African Risk Capacity (ARC), and the Pacific Catastrophe Risk Insurance Company (PCRIC). These pools have provided developing countries with numerous benefits including fast insurance payouts, tools to help identify and manage disaster risks, and platforms to foster political dialogue on disaster risk management. At the same time, questions remain around the limitations of the pools and their evolution going forward.