integrated safeguards datasheet - Documents & Reports

I. Basic Information
Date prepared/updated: 10/26/2010
Report No.: AC5591
1. Basic Project Data
Country: Europe and Central Asia
Project ID: P110910
Project Name: South East Europe and Caucasus Catastrophe Risk Insurance Facility
Task Team Leader: Alison C. N. Cave
Estimated Appraisal Date: September 3,
Estimated Board Date: February 17, 2011
Managing Unit: ECSSD
Lending Instrument: Adaptable Program
Sector: Non-compulsory pensions, insurance and contractual savings (70%);General
water, sanitation and flood protection sector (30%)
Theme: Other financial and private sector development (50%);Natural disaster
management (30%);Climate change (20%)
IBRD Amount (US$m.):
IDA Amount (US$m.):
GEF Amount (US$m.):
PCF Amount (US$m.):
Other financing amounts by source:
Financing Gap
Environmental Category: C - Not Required
Simplified Processing
Simple []
Repeater []
Is this project processed under OP 8.50 (Emergency Recovery)
Yes [ ]
No [ ]
or OP 8.00 (Rapid Response to Crises and Emergencies)
2. Project Objectives
The Project Development Objective (PDO) is to increase access of homeowners,
businesses and government agencies to financial protection from losses caused by climate
change and geo-hazards. The PDO will be achieved through supporting the creation of
Europa Reinsurance Facility Limited ("Europa Re"), a specialized regional reinsurer
which, in turn, will enable a rapid growth of catastrophe risk insurance markets in the
member countries.
3. Project Description
Insurance coverage against weather risk and geo-related perils in the countries of South
East Europe and Caucasus is virtually non-existent. Europa Re is a catastrophe risk reinsurance company owned by countries of South East Europe and Caucasus with the
objective to increase the number of homeowners, farmers, SMEs and government
organizations insured against weather-related risks and geo-hazards.
Europa Re will enable businesses, households and governments better adapt to climate
change by receiving access to affordable and accessible insurance coverage against
weather extremes and geo-hazards. The main insurance products backed by Europa Re
will be: (i) parametric index-based weather insurance coverage for climate-related
hazards such as excessive temperature or precipitation, which would protect the buyers
against the loss of business revenue due to adverse weather; and (ii) catastrophe
insurance coverage for damages caused to property and contents by earthquake and flood.
All catastrophe insurance products will be sold through local private insurance companies
and their agents and reinsured by Europa Re.
The proposed project comprises the following two components:
-- Component 1: Participation in Europa Re. The project will support SEEC countries#
efforts to become Europa Re shareholders by financing their membership contributions to
the Facility. Financing for this component will come from IBRD loans (for Serbia and
FYR Macedonia) and IDA credits (for Armenia, Georgia, Bosnia and Herzegovina).
-- Component 2: Technical assistance. While the project will not directly finance any
technical assistance work required for the launch of the facility, it will (i) enable Europa
Re to procure the necessary technical expertise out of its own funds; and (ii) play a
catalytic role in raising donor funding for Europa Re for the technical work required for
the launch of new catastrophe insurance products in the member states.
4. Project Location and salient physical characteristics relevant to the safeguard
The project covers countries in Southeast Europe and the Caucasus. The governments of
four participating countries (Armenia, Georgia and FYR Macedonia, and Serbia) have
expressed their full commitment to the program and their representatives will actively
participate in program governance through shareholders meetings and participation on
policy advisory board while the government of Bosnia and Herzegovina is currently at
the advanced stage of project preparation.
The project was classified as environmental category C as no environmental impact is
expected from the proposed operation.
5. Environmental and Social Safeguards Specialists
6. Safeguard Policies Triggered
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waterways (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
II. Key Safeguard Policy Issues and Their Management
A. Summary of Key Safeguard Issues
1. Describe any safeguard issues and impacts associated with the proposed project.
Identify and describe any potential large scale, significant and/or irreversible impacts:
The project will not cause any environmental or social safeguard issues and is rated
Category C. Addressing the financial risk associated with natural disasters is one of the
pillars of the broader concept of disaster risk management. The financial effects of
natural disasters fall disproportionately on the poor who may lose their productive and
physical assets. Governments have limited capacity to replace these assets. Europa Re
does not directly target the poorest segments of the population with the proposed
insurance products, but instead pursues the objective of providing competitively priced
dependable catastrophe insurance products to middle and low-middle income class
population and businesses with the view to enabling the government better target postdisaster subsidies to the truly needy. In addition, the facility would enable government
itself to purchase insurance protection against natural disasters for public infrastructure
and buildings as well as receive immediate insurance payouts into the budget in case of
adverse weather events pre-defined in parametric weather risk contracts. In the aftermath
of natural disasters, the proceeds from such insurance coverage will be made immediately
available to provide financial assistance to the poor. Often the financial incentives
offered by insurance products will induce environmentally responsible behavior (i.e. not
settling in flood zones or areas prone to landslides, retrofitting buildings to withstand
earthquakes, etc.).
2. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
The insurance policies supported by Europa Re are expected to be affordable. The
premium prices will vary from country to country based on risk exposure
(frequency/severity), vulnerability of insured assets or income to natural disasters, and
the level of insurance deductibles. To determine the exact pricing of insurance policies,
the Facility will develop detailed catastrophe risk models that would enable it to set
actuarially sound premium rates and the level of deductibles that would make catastrophe
insurance coverage affordable. Nevertheless, based on the experience from other
countries and the fact that the risk will be diversified across a large region, the premium
rates are expected to be highly competitive and affordable for most of the population and
3. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts.
Not Applicable.
4. Describe measures taken by the borrower to address safeguard policy issues. Provide
an assessment of borrower capacity to plan and implement the measures described.
The project will provide technical assistance to help governments: (a) map hazardous
areas (flood zones, fragile and vulnerable lands) and (b) develop a regulatory framework
that will provide financial incentives and disincentives to settlement in hazardous areas.
5. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people.
Key stakeholders include homeowners, farmers, SMEs and governments. The Facility
will make hazard maps available to the public so that people can see if they are located in
a zone vulnerable to natural disasters. Hydrometeorological data will likewise assist
farmers, SMEs and governments in decisions on weather-dependent activities.
B. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Pest Management Plan:
Was the document disclosed prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
* If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP.
If in-country disclosure of any of the above documents is not expected, please
explain why:
Not applicable.
C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
Have costs related to safeguard policy measures been included in the project
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
D. Approvals
Signed and submitted by:
Task Team Leader:
Environmental Specialist:
Social Development Specialist
Additional Environmental and/or
Social Development Specialist(s):
Ms Alison C. N. Cave
Mr Wael Zakout
Approved by:
Sector Manager: