Japan and the Asian Development Bank (ADB) have committed to promote programs that develop natural catastrophe risk insurance and reinsurance mechanisms in the Asia and Pacific region.
An ADB announcement issued Nov. 5 said the commitment came at the conclusion of a conference which brought together over 250 representatives from ADB member-countries, officials from Japan’s Ministry of Finance, the World Bank Group and other donors, academicians and representatives from global insurers, reinsurers, and other financial intermediaries.
One conference workshop focused on catastrophe insurance for Asia’s megacities. A second workshop, co-sponsored by World Bank, discussed developing a catastrophe risk transfer mechanism for the Pacific Island region.
Every year, natural disasters inflict substantial damage on the economies and loss of life in Asia-Pacific nations. However, recent developments in insurance, reinsurance, and risk capital markets, combined with a new emphasis within the disaster assistance community on risk reduction, have produced new tools that could potentially help disaster risk management in the region.
The participants discussed new developments amid the need for quick action due to global warming and in light of the development community’s recognition of the importance of proactive disaster risk management.
ADB noted that the Asia-Pacific region is currently facing the challenges of shifting to risk reduction management. As a development bank, ADB has adopted a Disaster and Emergency Assistance Policy, which stresses the advantages of working in partnership with private companies, including insurance industry specialists such as Munich Re, Swiss Re, and Mitsui Sumitomo Insurance Group.
The participants considered various options in establishing catastrophe risk transfer facilities for Pacific Island nations and for Asian megacities.
ADB could provide technical assistance to help governments create an environment for a strong insurance and reinsurance market, as well as work with the private sector to build natural catastrophe insurance pools.
ADB’s Vice President for Knowledge Management and Sustainable Development Ursula Schaefer-Preuss said ADB’s member-countries, in partnerships with the relevant institutions and civil society organizations across borders, must be committed to undertake the necessary work to “reduce the risks and adequately prepare for the natural disasters that we all know are coming”.