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
This working paper presents a framework that compares contingent loans, grants from multilateral development banks, catastrophe bonds, and insurance provided through regional risk pools.
Read moreCost multiple
The cost multiple measures the average amount a government pays to receive USD 1 of payout from a financing instrument over its lifetime.
Risk transfer
When disaster risk is shifted to insurers or capital markets.
Risk retention
When governments retain and finance disaster costs themselves.
Climate resilient debt clause or 'debt pause clause'
A provision in sovereign debt contracts that enables the borrower to temporarily stop repaying debt service for a pre-agreed period when a predefined event occurs.
Total crisis financing
Development funding focused mainly on crisis prevention, preparedness and response activities.
Trigger
A predefined threshold that activates payments or actions within risk financing mechanisms.
