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Disaster Mitigation and Catastrophe Insurance

Nine of the ten most disaster-prone developing countries in the world are members of the Commonwealth. In some instances the damage caused by natural disasters in these countries has been as high as 7 per cent of the Gross Domestic Product. Increased premiums for hazard risk insurance is a major consequence of the high cost of such natural disasters. In some Commonwealth regions the reinsurance industry has even withdrawn business. With official development assistance decreasing and the inability of the public sector to sustain a disproportionate burden of post-disaster rehabilitation and reconstruction, there is a growing need for public-private partnerships to help spread risks and increase insurance coverage.

Given the existence of a number of international institutions and mechanisms providing disaster assistance in the form of immediate post-disaster relief, post-disaster rehabilitation and reconstruction, and programmes on disaster preparedness and mitigation, the most effective contribution the Commonwealth can make is to improve the effectiveness of existing mechanisms for disaster assistance, with particular emphasis on greater private sector involvement.

The Secretariat aims to:

  • strengthen existing international mechanisms for the provision of assistance to meet pre- and post-disaster requirements of vulnerable countries;
  • consider the creation of new windows in international financial institutions to provide adequate and timely financing for disaster preparedness, as well as post-disaster reconstruction and rehabilitation; and
  • develop partnerships with the private sector to implement schemes that spread risks, reduce insurance premiums, expand coverage and increase financing for post-disaster reconstruction and rehabilitation.