Natural Disaster Fund (Global Parametrics) II

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The Natural Disaster Fund (NDF) is a risk pool that offers customers tailored solutions for their risks in developing countries based on scientific weather models, actuarial methods and risk finance instruments. The NDF offers this protection through tailored weather derivatives that customers use to protect their own activities and the vulnerable people in developing countries who benefit from them. These weather derivatives represent indirect insurance-like protection. Intermediaries are, for example, microfinance institutions or companies that work with the target group. After a triggering event, the NDF pays the predefined payout amount to the intermediaries, who in turn support the target group. By triggering the payments based on the measurement of certain values (e.g. wind speed), a damage assessment as with a classic insurance policy is not necessary. This enables benefits to be paid out quickly and the living situation of those affected to improve quickly. In addition to the FC funds, the NDF uses a further approx. USD 83 million from the British government and Hannover Re to assume the risk. Global Parametrics is the manager of the NDF and covers the entire value chain from risk modeling to risk assumption in the NDF.