Project profile — The Pacific Catastrophe Risk Assessment and Financing Initiative

This project supports the World Bank’s Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) to provide the Pacific Island countries (PICs) with disaster risk assessment and financing tools, including sovereign insurance, for enhanced disaster risk management and climate change adaptation. PICs are among the most vulnerable to the increasing number and severity of natural disasters due to climate change. Natural disasters often affect the safety and security of people, particularly the poor and vulnerable. Negative impacts on livelihoods and vital infrastructure, as well as on government budgets, also undermine efforts to reduce poverty. This project supports the newly established PCRAFI facility to provide catastrophic risk insurance coverage to participating PICs and technical assistance to build the capacity of governments, regional organizations and the PCRAFI facility on disaster risk financing, development of insurance products, and public financial management in response to natural disasters.

The expected outcomes for this project include: (1) improved PIC governments’ understanding of natural disasters’ economic and fiscal impacts; (2) improved institutional capacity of PIC governments and regional organizations to strengthen catastrophic risk-sharing rules among private and public stakeholders, and stronger disaster-related contingency plans and improve financial accountability and transparency of post-disaster expenditures; and (3) improved financial risk management for PICs.

Results achieved as of March 2023 include: (1) updated the Pacific Risk Information System that now included data from Vanuatu, Tonga, Solomon Islands, Samoa and Cook Islands; (2) assisted the development of the Disaster Risk Financing Strategy of Tonga and Samoa; (3) contributed to improving the financial risk management of the Pacific Island countries through technical assistance that resulted to an aggregate insurance coverage in the PICs amounting to US$20.9 million; and (4) completed the technical assistance and investment project that established and operationalized the Pacific Catastrophe Risk Insurance Facility, and developed two new insurance products yet to be launched in the market (excessive rainfall and drought insurance).