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(CMC) – The World Bank says it has signed an agreement with the German government-owned development bank, KfW, formerly KfW Bankengruppe (banking group), for a EUR 15 million contribution from the Federal Republic of Germany to be executed under the Central America and Caribbean Catastrophe Risk Insurance Program (CACCRIP).
On Wednesday, the World Bank said this is the biggest contribution to the CACCRIP from a single donor.
The Washington-based financial institution said the engagement is “part of the efforts from donors and the international community to address increasing disaster risks by supporting insurance mechanisms that provide rapid payouts to countries in the aftermath of a disaster.”
Jorge Familiar, the World Bank’s Regional Vice President for Latin America and the Caribbean, said that, “with climate change, we can expect more frequent and intensive weather events and hurricanes.
“This calls for countries to build resilience from a 360-degree perspective from disaster preparedness to physical and financial resilience,” he said. “This initiative is part of a broader engagement, where we are working with countries in the Caribbean and Central America to develop cost-effective, affordable and sustainable disaster risk financing and insurance strategies”.
Familiar said the new funding for the CACCRIP will be used to continue improving the affordability of high-quality sovereign catastrophe risk transfer associated with earthquakes and climate risks for the Council of Ministers of Finance of Central America and the Dominican Republic (COSEFIN) countries participating in CCRIF SPC, a multi-country risk pool.
“It will also be used to enhance the capacity of the Ministries of Finance to develop and implement disaster risk financing and insurance strategies,” Familiar said. “The CACCRIP also supports activities in Caribbean Community (CARICOM) countries with similar objectives.”
A formal signing event was held in COP24, during which participants welcomed the initiative and renewed efforts from donors and the international community to address increasing global climate and disaster risks, the World Bank said.
“This is an important step to enhance the support to the Central American countries in their efforts to adapt to the impacts of climate change.” said Ingrid-Gabriela Hoven, World Banks’ Director General for Global Programs. “The CCRIF is an important part of the InsuResilience Global Partnership. The CCRIF has proven its ability to quickly help poor and vulnerable people in the aftermath of disasters.”
As part of a comprehensive disaster risk management strategy, the World Bank said CACCRIP has supported the development of disaster risk financing strategies and operational plans, as well as a tool to assess the macroeconomic impact of disasters, and the development of budget classifiers.
To date, the bank said key results supported by the programme includes linking disaster risk management and risk financing.
In recent years, the World Bank said the international community has “increasingly recognized the relevance of disaster risk financing as part of the integrated framework of disaster risk management to reduce physical and fiscal risk.”
The CACCRIP currently channels resources from the European Union,Canada, Germany and the United States.