Indemnity insurance
A (re)insurance contract which pays out compensation worth the ultimate net loss of a specific asset. This type of insurance can be useful in protecting high-value assets such as homes, where there is a relatively narrow scope of potential loss. Insurance payouts are determined based on an assessment of losses after an event has occurred (InsuResilience Global Partnership 2020).
This insight paper aims to support policymakers and practitioners as they seek to scale up financial protection against climate-related shocks through sovereign insurance solutions.
Read morePre-arranged financing
Financing approved before crises that is released automatically when agreed triggers are met.
Risk retention
When governments retain and finance disaster costs themselves.
Catastrophe bond
A catastrophe bond (cat bond) is a risk-transfer financial instrument that allows governments or insurers to transfer disaster risk to capital market investors.
Social protection
Policies and programmes designed to reduce and prevent poverty and vulnerability throughout the life cycle.
Attachment point
The loss level above which a reinsurer begins paying under a reinsurance agreement.
Disaster risk financing
Financial arrangements made in advance to pay for disaster prevention, response and recovery.
