Closing Date for Expressions of Interest: 11 March 2022 at 4pm (Cook Islands)
Contract Type/Period: Lump-Sum to 15 June 2022
Selection Method: Consultant Qualification Selection (Individual/Firm)
The Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) insurance program provides climate and disaster risk insurance to member countries in the Pacific region. Its primary aim is to provide a quick injection of cash to help participating governments deliver relief efforts as quickly as possible after a disaster. The PCRAFI insurance program provides parametric earthquake and tropical cyclone insurance solutions that increase the financial response capacity of Pacific Island Countries, helping them to meet post-disaster funding needs without compromising their fiscal balances and development. The insurance provides cash payouts to insured governments within 15 working days after a qualifying disaster event.
Following a successful pilot of the PCRAFI Insurance Program, the PCRAFI Facility was established by legal statute in the Cook Islands on June 10, 2016, to provide the insurance program to Pacific Island Countries (PICs) going forward. The PCRAFI Facility was established as the Pacific Catastrophe Risk Insurance Foundation (PCRIF) that own a group captive insurer, the Pacific Catastrophe Risk Insurance Company (PCRIC). As the PCRIC is being operationalized a series of initial arrangements have been made to enable the commencement of key operations, including the appointment of a Board of Directors, Chief Executive, key service provider contracts and establishment of fully operational captive insurance facility in the Cook Islands.
Assignment Description
The Pacific Island Countries (PICs) are threatened by many types of natural disasters including, tropical cyclones, earthquakes, intense rainfall, and drought; being geographically small means that the entire country or very large parts often suffer during extreme events, negatively affecting the entire national economy.
The PCRIC’s current risk modelling capabilities (and insurance product offering and reinsurance strategy) rely on models developed by AIR Worldwide for Tropical Cyclones (including damages from wind, storm surge and rainfall) and Earthquakes (including earthquake-induced tsunamis).
The PCRIC is now requesting the support of a suitably experienced and qualified individual, firm (or consortium of firms), ‘the Consultant’, to support the PCRIC offering a sovereign level parametric insurance product for Drought to PICs through –
1. A detailed literature review of Drought, specific to PICs and small island states in general, with a particular focus on its various definitions, (meteorological, hydrological, etc.) the relevant timescales, and impact on small island states.
2. A recommended spatial and temporal definition of drought (which may vary by PICs or region), which could form the basis of risk transfer instrument / sovereign level parametric insurance product.
3. The creation of a consolidated spatial database/catalogue of historic reference drought ‘events’ and associated impacts.
4. Recommendations for the potential design of a parametric insurance trigger, suitable monitoring framework and reporting agency that could be used as the basis for a parametric insurance product.
Two prior projects, led by the World Bank Disaster Risk Finance Insurance Program, have explored the feasibility of both excess rainfall and drought insurance products, including potential product design. The outcomes of these earlier projects will be shared with the Consultant to inform this study.
The assignment will consist of 4 distinct components as detailed below. The Consultant is expected to work jointly with the PCRIC Catastrophe Modelling Advisor, and if required Technical Specialist and Regional Coordinator, on all stages of the project.
Note: In these terms of reference, Pacific Island Countries (PICs) refers to those included in the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI): the Cook Islands, the Republic of Fiji, the Republic of Kiribati, the Republic of the Marshall Islands, the Federated States of Micronesia, the Republic of Nauru, Niue, the Republic of Palau, the Independent State of Papua New Guinea, Samoa, the Solomon Islands, the Republic of Tonga, Tuvalu, and the Republic of Vanuatu.
Component 1: Review Prior Project Material & Define Priorities Regions
Objective
The first objective of component 1 is to evaluate the conclusions of prior projects to ensure the Consultant’s solutions and proposed work to be undertaken in Components 2-4 builds upon previous projects where appropriate.
Component 1 should review the work undertaken in both prior projects
1. Pacific Rainfall Hazard Data for Parametric Insurance, undertaken by DHI in 2018
2. Feasibility Study of Excess Rainfall and Drought Insurance for Pacific Island States, undertaken by Celsius Pro in 2020
(Available reports, data, and documentation to be provided to the Consultant).
The second objective of component 1 is to define, with the PRCIC, any regional / country priorities.
The output of Component 1 is intended to help inform and steer Component 2 & 3. Specifically, based on the output of Component 1, the PCRC may, in agreement with the Consultant, refine the expected output and deliverable of Components 2 & 3.
Key Actions
Key actions will include, but should not be limited to:
1. An expert review of reports, data, and documentation created for both prior projects.
2. Detailed discussion with the PRCIC technical & leadership teams to establish any regional / country priorities
Expected Outputs
1) A short technical report or presentation highlighting the Consultant’s conclusions on the prior work and recommendations for geographic/country priorities and or modifications to Components 2-4.
2) A technical discussion with the PCRIC Catastrophe Modelling Advisor and Technical Specialists with agreed action items and agreed modifications to Components 2-4.
Component 2: Small Island States Drought Events, Definitions and Historic Catalogues
Objective
Component 2 will build a comprehensive understanding of Drought, specific to PICs (and small island states in general) and make explicit recommendations (with justification) regarding the appropriate definition(s) of a drought, both spatial and temporal, for the purposes of risk transfer or disaster risk finance instruments.
Component 2 will also build a consistent database of historic drought events across PICs, their impacts in terms of economic, financial, and human losses and government emergency response costs.
Key Actions
Key actions will include, but should not be limited to:
1. Review of scientific and historic studies on drought, its impacts and spatial / temporal distribution across PICs, and other small island states (worldwide) as relevant. Emphasis should be given to both secondary contributing factors to the impacts (i.e., heat-stress on human costs/ deaths), as well as the impact of near-term climate change in the Pacific.
2. Compilation of a consolidated spatial database/catalogue of major drought event across the PICs. Constructed through the review of commonly used public data sources (EMDat, AusAID, etc.) as well as other sources to be recommended by the Consultant.
The database should consider geographic characteristics, hazard definitions as well economic, financial, and human losses and government emergency response costs. Economic impacts will be normalized to present day values in current $US values, using established techniques to normalize based on population growth, inflation, and other economic factors and /or currency exchange rates). The specific parameters to be include in the database, and normalization methodologies, to be used will be agreed with PCRIC Catastrophe Modelling Advisor.
Expected Outputs
1) A literature review of Drought and its impact in the PICs.
2) A technical report presenting and justifying the recommended spatial and temporal definition of drought (which may vary by PICs or region, and which could form the basis of risk transfer instrument / sovereign level parametric insurance product).
3) A presentation to and technical discussion with the PCRIC Catastrophe Modelling Advisor and Technical Specialists.
4) A catalogue / database, in a suitable commonly used data format, of historic events, based on the recommended event definitions and hazard metrics, and associated impact metrics by PIC.
Component 3: Assess Requirements and Demand of PICs
Objective
With due consideration of the conclusions of Components 1 & 2, Component 3 will establish the specific needs (for a sovereign level parametric insurance product for Drought) of the PICs identified in Component 1.
Component 3 is intended to be led jointly by the Consultant, PCRIC technical team and Regional Coordinator facilitate introductions to and engagements with the relevant government entities, agencies, and stakeholders across the PICs.
Key Actions
Key actions will include, but should not be limited to:
1. Identify with the PCRIC Leadership and Regional Coordinator relevant PIC entities, government agencies and stakeholders across the PICs.
2. Lead discussions the above stakeholders to establish clear needs / requirements from a sovereign level parametric insurance product for Drought, particularly with respect to the finding of component 2.
Expected Outputs
1) A detailed technical report presenting the Consultants finding and summarising and justifying any recommendations from this Component.
2) A presentation to and technical discussion with the PCRIC Catastrophe Modelling Advisor and Technical Specialists.
Note: All engagement with PICs are expected to be virtual due to both continued concerns with COVID-19 but also to ensure the timescales of the project are maintained.
Component 4: Parametric Index, Trigger and Drought Monitoring
Objective
With due consideration of the conclusions of Components 1-3, Component 4 will recommend an appropriate parametric index design, objective trigger mechanism, and appropriate monitoring framework.
The proposed parametric indices and objective trigger mechanism should be easy to explain and should be understandable by non-technical experts; they should also be acceptable for financial transactions in the international (re)insurance market.
Key Actions
Key actions will include, but should not be limited to:
1. Identification of independent reporting / monitoring agencies for Drought across the PICs.
2. Design and recommend parametric indices and data sources for Drought events affecting PICs based on Component 2.
3. Produce an analytical assessment of whether the proposed index has sufficiently low basis risk compared to impacts defined in Component 2 for insurance purposes and can act as a suitable disaster risk finance instrument for Pacific Island Countries.
4. Define an objective trigger based on publicly available third-party information, e.g., from the regional Met Office or other official source. Proposal may include options for multiple triggers e.g., NWP output, satellite derived impacts etc
Expected Outputs
1) A detailed technical report presenting and justifying the recommendations from this Component.
2) A presentation to and technical discussion with the PCRIC Catastrophe Modelling Advisor and Technical Specialists.
Supervision & Reporting
The Consultant will report to the CEO of PCRIC who will accept the deliverables but will liaise mainly with the Catastrophe Modelling Advisor on day-to-day operations. The Consultant may also work with the Project Coordinator, Insurance Manager, Technical Specialist and Reinsurance Broker and may also interact with the World Bank team providing technical assistance to PCRIC.
Institutional Arrangements
1. The Consultant role will work from his/her own office.
2. If required the Consultant is expected to travel to the Pacific Island Countries, once COVID-19 restrictions are lifted, and at times agreed with the PCRIC CEO.
3. Travel costs will be covered by a lump-sum payment to be agreed with the Consultant
Selection Criteria
1. The Consultant is expected to have significant expertise in Drought and Drought Risks.
2. The Consultant will have knowledge of catastrophe risk modeling.
3. The Consultant will have developed models or have experience of using such models which have been used in insurance transactions previously and ideally should have been directly involved in a catastrophe risk transaction previously, for example as a Calculation Agent.
4. The Consultant will have advanced analytical skills, catastrophe risk modeling expertise, quantitative financial expertise, a strong knowledge of parametric insurance, excellent presentation skills and be able to develop strong relationships with the clients.
5. The Consultant will closely interact and report to the PCRIC team that will accept the deliverables.
6. The Consultant must be willing and able to undertake trips to the Pacific region to consult stakeholders and/or present outputs to clients if required.
Timetable
This period of this assignment is until mid-June 2022, with an estimated schedule of outputs as follows:
Outputs | Approximate Completion date
|
Component 1 Deliverables Due | Friday, 22-April 2022
|
Component 1 Review Discussion / Sign-off with the PCRIC team | Friday, 29-April 2022
|
Component 2 Deliverables Due | Friday, 20-May 2022
|
Component 2 Review Discussion / Sign-off with the PCRIC team | Friday, 27-May 2022
|
Component 3 PIC Engagement | May 2022
|
Component 3 & 4 Deliverables Due | Friday, 10-Jun 2022
|
Final Review Discussion / Sign-off with the PCRIC team | Before 17-June 2022
|
Note: it is anticipated that components 2 & 3 will be conducted in parallel.
Payment Schedule
This assignment will be undertaken as a lumpsum contract and will be paid on acceptance of deliverables and an invoice.
Potential for future work
There is a possibility for work as the need arises and additional funds become available. The scope of this future work is expected to be similar to the work conducted under the current assignment but may be revised in the light of the results of the program. Furthermore, the continuation of the future work with the selected firm would depend on the firm’s satisfactory implementation of this assignment.
Note on items that should be included in the Expression of Interest
The procurement method for this activity follows the World Bank procurement regulations for “Consultant Qualification Selection”. EOI’s should provide enough information to allow the individual most qualified for the job to be identified, but full costing or details of the activity are not required at this stage. PCRIC will then invite the preferred candidate to submit a technical/financial proposal for negotiation.
EOIs may be submitted via email. While EOIs are to be brief, the following information should be included for use by PCRIC in assessing an individual’s ability to meet the requirements of the contract:
• Full contact details
• CV’s, including qualifications, experience and references
• Basic information on costing/consulting fees
• Brief overview of current/past assignments, preferably of a similar size scope/seniority
• Declaration of any potential conflicts of interest
• Confirmation of eligibility to apply for World Bank funded contracts
It is not necessary to provide a detailed proposed approach or fee as part of the EOI. A shortlist will be identified, and interviews held and the preferred candidates will then be asked to present a technical and financial proposal for services.
Submitting an Expression of Interest
EOIs should be submitted by email only to the CEO on the emails below arriving no later than 4pm on Friday 11 March 2022 (Cook Islands).
Contact
For further information please contact us at the address below:
Aholotu Palu, CEO, PCRIC
ceo@pcric.org or aholotupalu@yahoo.co.uk