The World Bank launched on Saturday a $500 million, fast-disbursing insurance fund to combat virulent disease outbreaks in poor countries, creating the world’s first insurance market for pandemic risk.
“The recent Ebola crisis in West Africa was a tragedy that we were simply not prepared for. It was a wake-up call to the world,” World Bank President Jim Yong Kim told a media conference during a Group of Seven finance ministers and central bank governors’ meeting in Sendai, Japan.
“We can’t change the speed of a hurricane or the magnitude of an earthquake, but we can change the trajectory of an outbreak. With enough money sent to the right place at the right time, we can save lives and protect economies,” Kim stated.
He said the new Pandemic Emergency Financing Facility (PEF) will accelerate global and national responses to disease outbreaks that threaten large populations and fragile economies.
It will initially provide up to $500 million that can be disbursed quickly to fight a pandemic, with funds released once parametric triggers are met, based on the size, severity and spread of an outbreak.
The facility was developed in conjunction with the World Health Organization and reinsurers Swiss Re and Munich Re, which are acting as insurance providers. It will include catastrophe, or cat bonds, in which purchasers would lose principal if fund flows are triggered by a pandemic outbreak, the World Bank said.
Margaret Chan, director-general of the World Health Organization, said in a statement that the plan would provide a “crucial line of defense” against a rise of new and re-emerging infectious diseases.
The mosquito-borne Zika virus now spreading in Latin America is not included in the insurance scheme, but Kim said funds for Zika and other diseases that could lead to pandemics would be made available through a separate cash window, which is likely to be in the $100 million range.
Kim added that he expected more contributions from G7 and other donors.