Glossary

Sovereign insurance

Sovereign insurance is insurance coverage purchased by a national government to protect its budget against the financial impacts of disasters. Under these arrangements, the government pays a premium and receives a payout when a predefined disaster trigger is met

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This working paper presents a framework that compares contingent loans, grants from multilateral development banks, catastrophe bonds, and insurance provided through regional risk pools.

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other key terms

Parametric insurance

Insurance that pays when an agreed indicator reaches a set level, not actual losses.

Sustainable development

Meeting today’s needs without limiting future generations’ ability to meet theirs.

Shock-responsive social protection

Social protection systems adapted to scale quickly when large shocks affect many people.

Crisis financing

Funding designed to prevent, prepare for and respond to crises before and after they occur.

Adaptive social protection

Social protection systems that adjust to shocks, helping vulnerable people prepare, cope and recover over time.

Indemnity insurance

Insurance that pays based on assessed losses after damage to a specific asset.