Draft – as of Sunday, October 05, 2008 3rd Asian Ministerial Conference on Disaster Risk Reduction 2-4 December 2008 Kuala Lumpur, Malaysia “Multi-stakeholder Partnership for Disaster Risk Reduction From National to Local” Concept Note Technical Session 1 (TS-1) Public-Private Partnerships in Disaster Risk Financing Schedule Theme to be addressed: Organizers: 9:00-11:00, December 3, 2008 Risk insurance and re-insurance, catastrophe risk modeling Background: The economic impact of major disasters in Asian countries has been rising rapidly due to a variety of factors ranging from the growing concentration of population and assets in risky areas to increases in climate variability. However, most of the costs generated by natural disasters are retained by the governments and the households because efficient catastrophe risk-transfer mechanisms, including catastrophe insurance, are not available. Session Leader: Olivier Mahul, World Bank Session Co-leaders: Christoph Pusch, World Bank Guillermo Pacheco-Weber, World Bank Recent innovations in catastrophe risk modeling and in catastrophe insurance markets can help Asian middle- and low-income countries mitigate the financial impact of these adverse events, as part of their comprehensive disaster risk management strategy. Although some recent public-private initiatives on catastrophic risk financing have been successful, market imperfections may hamper their development, or at least their expansion, both on the demand side (e.g., low awareness of catastrophe risk exposure, post-disaster assistance, weak institutional capacity) and on the supply side (e.g., reinsurance capacity, reinsurance cycles, start-up costs, information costs, excessive catastrophe reinsurance pricing). Session Objectives: This session aims at discussing how the public sector and the private insurance industry could improve, through public-private partnerships, the efficiency of the catastrophe insurance markets and increasing the catastrophe insurance penetration in Asian countries, both at the macro (government) level and micro (households, SMEs) level. This discussion will be illustrated by recent projects on catastrophe risk modeling and catastrophe risk financing. Speakers and title of their interventions Olivier Mahul, Program Manager, World Bank Rationale for public intervention in catastrophe insurance markets in developing countries Page 1 of 4 Draft – as of Sunday, October 05, 2008 Edward Anderson, Disaster Risk Management Specialist, World Bank Catastrophe risk modeling and its applications in disaster risk management: the case of the Central America Probabilistic Risk Assessment project Neil Mathison, Director, Benfield Catastrophe Risk markets in Asia: challenges and opportunities Andreas Bollman, Director, Swiss Re Private-public partnerships in the implementation of catastrophe insurance schemes from a reinsurance perspective Rubem Hofliger, Director, FONDEN, Government of Mexico Some Lessons from the Mexican Experience on Catastrophe Risk Financing Possible Key recommendations Promote catastrophe risk financing in the dialogue on disaster risk management. Create an enabling environment for the development of competitive catastrophe risk insurance markets. Promote catastrophe risk insurance as financial incentives in disaster risk mitigation. Page 2 of 4 Draft – as of Sunday, October 05, 2008 3rd Asian Ministerial Conference on Disaster Risk Reduction 2-4 December 2008 Kuala Lumpur, Malaysia “Multi-stakeholder Partnership for Disaster Risk Reduction From National to Local” Concept Note High Level Round Table (HLRT-1) Public-Private Partnership for Disaster Risk Reduction Schedule Theme to be addressed: Organizers: 11:30- 13:00, December 3, 2008 Risk insurance and re-insurance, catastrophe risk modeling Background: Session Objectives: Speakers and title of their interventions Possible Key recommendations Session Leaders: Christoph Pusch, World Bank & Olivier Mahul, World Bank As the frequency and intensity of catastrophic events has increased over the past decades and the number of fatalities, injuries and property losses has risen, governments around the world are putting a stronger emphasis on building more effective catastrophe risk management strategies. This is particularly true in Asia where the impact of natural disasters is felt more intensely due to the high population density of megacities and the concentration of property value in hazard prone zones. The development of efficient and affordable catastrophe risk insurance markets is an important component of cost-effective disaster risk management. It contributes to the governments’ role of protecting its citizens and businesses against major adverse natural events and helps government to focus public assistance in priority on the poor and disadvantaged in the aftermath of a disaster. Inform how governments can create an enabling environment for enhancing catastrophe risk insurance markets Share lessons on how governments can promote public-private partnerships in the development of innovative insurance solutions. Review how the public and the private sector can work together to increase catastrophe insurance penetration in Asia and, thereby, alleviate the impact of catastrophe losses after a disaster. Countries of interest: Azerbaijan, China, India, Indonesia, Kazakhstan, Malaysia, Philippines. 1. Promote catastrophe risk financing as an important component of a proactive and strategic framework for disaster risk management 2. Promote competitive catastrophe insurance markets to increase catastrophe insurance penetration 3. Promote catastrophe risk insurance as financial incentives in disaster risk mitigation. Page 3 of 4 Draft – as of Sunday, October 05, 2008 Page 4 of 4