Global Parametrics (GP) and Germany’s KfW, one of the world’s leading promotional banks, today announced the first use of the NDF Technical Assistance Facility, a € 3 million grant from the German Federal Ministry for Economic Cooperation and Development (BMZ) designed to facilitate high impact and scalable risk transfer with capacity from the Natural Disaster Fund (NDF) and partners.
The Technical Assistance Facility (TAF) will act as a complement to the NDF – with the objective to mitigate start-up challenges which often occur when designing parametric risk transfer solutions for clients with developmental impact, including the high investment costs of product development, institutional education and distribution in fledging markets. The TAF will also provide funding for research and development activities to create an innovative product offering where market demand has been identified.
Through initial catalytic investment from the TAF, solutions will grow and scale, serving to deepen the risk transfer market in developing and emerging economies. This will contribute to the NDF’s target of indirect protection to between 66 – 105 million poor and vulnerable people under the InsuResilience Global Partnership by 2025.
The first programme to harness the TAF, in partnership with risk modelers ERN and Ingeniar Ltd, will create an offering for landslide risk in the city of Manizales, Colombia. The funding will build a unique rainfall-based landslide model, harnessing rainfall data within Manizales’ network, including historical records and statistics from local stations. Global Parametrics will structure a parametric risk transfer product based on the final index. The risk transfer capacity for this solution is anticipated to come from the NDF and international reinsurance and capital markets.
The parametric programme will provide another layer of protection alongside pre-existing indemnity policies to assist in immediate recovery efforts in the aftermath of a landslide event in Manizales. This disaster management mechanism is anticipated to cover over 260,000 residents in the city. It is envisioned that the product will be able to scale up into a wider offering, to catalyse future market activity for similar solutions in other geographies.
Stefan W. Hirche, Principal Portfolio Manager of KfW, said “With our support of the Natural Disaster Fund, the German government and we at KfW are proud to enable our partner countries to protect their citizens better against climate risks.”
Hector Ibarra, CEO of Global Parametrics stated, “The Technical Assistance Facility is a key instrument to promote innovation in resilience to natural hazards and extreme weather. We are pleased to partner with ERN and Ingeniar to develop this vital protection against landslide risk.”
Mario Ordaz, President of the Board of ERN stated, “The development of a parametric landslide product for Manizales, the first of its kind in Colombia and Latin America, will improve the disaster financing planning at city level, allowing coverage for a recurrent peril.”
Alexa Morales, Director of the Disaster Risk Management Unit of Manizales acknowledged, “We want to consolidate an effective risk reduction and adaptation strategy to allow us anticipate disasters using territorial planning and financial protection strategies, besides responding to them efficiently with the aim of making the city more sustainable, resilient and competitive.”
Omar D. Cardona, CEO of Ingeniar Ltd. said, “Having detailed inventories of landslides by the City and Corpocaldas, besides records of previous rains for each case, together with a real-time warning system and hazard models developed by the National University of Colombia, makes Manizales an ideal natural laboratory.”
About Global Parametrics
Rethinking risk to build more inclusive resilience: Extreme weather events and natural hazards are being intensified by climate change, increasing the frequency and intensity of economic shocks which disrupt business and threaten livelihoods.
Established in 2016, Global Parametrics is a specialty provider of parametric solutions for natural hazard and extreme weather risk in emerging economies. Working with the private, public and third sector, GP uses its innovative climatic, seismic and financial risk modelling to rethink resilience for a new era of risk.
Learn more at: https://globalparametrics.com/
ERN is the Latin American leader in catastrophe risk models, evaluating natural and man-made hazard that impact people, buildings and infrastructure. ERN strives to provide solutions to the needs of our clients by extending our knowledge through studies and projects in different regions of the world. ERN’s avant-garde products and services are the results of an experienced team that is always committed to offering state-of-the-art methodologies and tools because of the continuous interest in research, development and technology.
Learn more at: https://www.ern.com.mx/web/index_en.html
About Ingeniar Ltd
INGENIAR has been the main private advisor for the local government of Manizales and the Autonomous Environmental Authority (CORPOCALDAS), leading over the past years the development of state-of-the-art risk management instruments, currently operational in the city. INGENIAR has led the development of the catastrophe risk profiles and disaster risk indicators of most of the countries of Latin America and the Caribbean for the Inter-American Development Bank, and led the development of the multi-hazard Global Risk Model for the UNDRR Global Assessment Reports.