PCRIC Joins in with PRP’s TWG on Risk Transfers Learning Series
Earlier this week, the Pacific Resilience Partnership (PRP) Technical Working Group (TWG) on disaster risk financing (DRF), organized and facilitated the fourth virtual learning episode. With the theme, “Risk Transfer: Shifting the Responsibility for Risk”, the Pacific Catastrophe Risk Insurance Company (PCRIC) CEO Mr. Aholotu Palu joined the learning series as a panelist.
PCRIC is the only provider of sovereign risk insurance in the Pacific, currently providing insurance coverage against tropical cyclones and earthquakes.
During the discussions, Mr. Palu explained that, “PCRIC’s policies are not designed to cover ALL losses faced by Pacific governments following a natural disaster. Rather, we aim to provide nations with a quick injection of funds, acting as a form of direct budget support to leaderships to finance immediate relief needs post-disaster.”
Pacific Island nations are extremely vulnerable and exposed to the effects of climate change. Additionally, they are often severely limited in resources to prepare or respond to disasters. However, understanding the correlation between disasters and the economy allows policymakers to effectively plan their response to natural hazard events with appropriate support.
“Climate change is here to stay, and we have to be ready with all means possible to avoid devastational impacts that have lasting consequences on livelihoods, economic and fiscal balances,” Mr. Palu highlighted.
As part of his presentation, he emphasized the key lessons learnt from PCRIC’s experience as a disaster risk insurance provider:
- A clear ongoing need for Pacific Island countries to have access to appropriate and cost- effective financial protection against disasters.
- Countries need access to financial support for financing premiums, which is even more true following the impacts of the COVID-19 pandemic.
- Pooling country policies together creates a critical mass of business that makes the risk pool more attractive to the international reinsurance markets.
- Countries need ongoing access to technical assistance to build capacity and understanding of disaster risk finance to be well-informed.
Mr. Palu also shared the new opportunities being developed by PCRIC in the risk transfer space which included:
- PCRIC investing heavily in the development of new products to cover a broader range of risks. This is to build the number of member countries actively participating in the PCRIC risk pool. In 2023, the company will be offering excess rainfall and drought products to countries across the region.
- PCRIC continuing to expand its reach to the types of entities that are able to purchase policies from the company. To date, this has only been limited to country governments. However, PCRIC is now in a position to issue policies to non-government or civil society organisations, the private sector, development partners and public sector agencies.
This disaster risk financing learning series will continue to run throughout the year with key experts being brought in to exchange ideas and hold conversations around this critical space currently affecting the Pacific region.
