FIVE Pacific island nations are set to be insured against natural disasters following the recent launch of a pilot catastrophe risk insurance program by Japan, the World Bank and the Secretariat of the Pacific Community (SPC) this month.
Though Fiji was not one of the Pacific islands included in the pilot project, Marshall Islands, Samoa, Solomon Islands, Tonga and Vanuatu have been earmarked to receive immediate funding if a major natural disaster occurs.
In a statement, the World Bank said the five Pacific islands planned to be better protected against natural disasters and were some of the most vulnerable to natural hazards, causing millions of dollars in damage and threatening the lives of many.
"Japan, the World Bank and SPC have teamed up with Pacific islands nations to launch the Pacific Catastrophe Risk Insurance Pilot," the World Bank said.
"The pilot will test whether a risk transfer arrangement modelled on an insurance plan can help Pacific island nations deal with the immediate financial effects of natural disasters.
"The pilot relies on state-of-the-art financial risk modelling techniques and is the first ever Pacific scheme to use parametric triggers, linking immediate post-disaster insurance payouts to specific hazard events.
"This joint effort will allow Pacific island nations to access earthquake and tropical cyclone catastrophe coverage from reinsurance companies at an attractive price."
The bank said governments' access to emergency funding would quicken response to the needs of those affected.
"It is especially important for vulnerable countries like those in the Pacific which must frequently deal with natural disasters," said World Bank country director for the Pacific, Franz Drees-Gross.
Meanwhile, the bank would act as an intermediary between the Pacific island nations and a group of insurance companies.
The bank said the companies were selected through a competitive bidding process - Sompo Japan Insurance, Mitsui Sumitomo Insurance, Tokio Marine and Nichido Fire Insurance and Swiss Re.
It said AIR Worldwide would provide the underlying risk modelling for the transaction.