WASHINGTON, 21st May, 2016 (WAM) — The World Bank has launched a US$500 million fast-disbursing insurance fund, the Pandemic Emergency Financing Facility, to combat deadly pandemics in poor countries, creating the world’s first insurance market for pandemic risk.
Japan has committed the first US$50 million towards the facility, which will combine funding from reinsurance markets with the proceeds of a new type of World Bank-issued high-yield pandemic “catastrophe” bond, the bank said.
In the event of a pandemic outbreak, the facility will release funds quickly to affected poor countries and qualified international first-responder agencies. The genesis of the new facility was the slow international response to the Ebola outbreak in 2014, when it took months to muster meaningful funds for affected countries as death tolls mounted.
“The recent Ebola crisis in West Africa was a tragedy that we were simply not prepared for. It was a wake-up call to the world,” World Bank President Jim Yong Kim told a media conference call.
“We can’t change the speed of a hurricane or the magnitude of an earthquake, but we can change the trajectory of an outbreak. With enough money sent to the right place at the right time, we can save lives and protect economies,” Kim added. The so-called Pandemic Emergency Financing Facility will initially provide up to US$500 million that can be disbursed quickly to fight a pandemic, with funds released once parametric triggers are met, based on the size, severity and spread of an outbreak.
The facility was developed in conjunction with the World Health Organisation and reinsurers Swiss Re and Munich Re, which are acting as insurance providers. It will include catastrophe, or cat bonds, in which purchasers would lose principal if fund flows are triggered by a pandemic outbreak, the World Bank said.