The Pacific Disaster Risk Financing Insurance Program (PDRFI Program) may make a rapid insurance payout following the catastrophic damage to Vanuatu caused by Cyclone Pam. The PDRFI Program is a joint initiative between the World Bank Group, the Secretariat of the Pacific Community and their partners, with funding from Japan’s government. It builds on the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI), the purpose of which is to increase the financial resilience of the Pacific Island Countries against natural and climate-related disasters, as part of their broader disaster risk management and climate change adaptation agenda.
Vanuatu is ranked as one of the most at-risk countries in the world for natural disasters due to its vulnerability and exposure to cyclones. The category five storm, Cyclone Pam (which hit Vanuatu on 14 March 2015), was one of the biggest cyclones ever experienced by the country. A state of emergency has been declared as a result. In consideration of such an extreme weather event and the severity of the damage suffered, the World Bank is investigating the possibility of a quick payout to the Government of Vanuatu under the PDRFI Program.
The replacement value of all of Vanuatu’s assets has been estimated by the catastrophe modeller, AIR, to be $3.3billion, with buildings and infrastructure (including major ports, the International Airport, power plants, bridges and roads) representing approximately 86.5% and 12.5% of this figure respectively. AIR advised that current indications suggest insured losses will be low because of the limited exposure and insurance penetration.