The World Bank Group is working on the next phase of its Pandemic Emergency Financing Facility (PEF 2.0), and is seeking risk modelling firms to assist it in this endeavour.
The PEF, which was established in 2016, is an insurance-based financing mechanism to support response efforts in developing economies to tackle rare, high-severity disease outbreaks. These efforts aim to prevent outbreaks from becoming pandemics.
According to the World Bank, the PEF financial structure includes complementary insurance and cash windows. The insurance window provides, under the first PEF transaction (PEF 1.0) completed in June 2017, coverage for a three-year period against outbreaks of six types of viruses with pandemic potential. The coverage for the risk transfer window was sourced through both a catastrophe bond (US$320 million) and swap (US$105 million).
The viruses covered are: new forms of influenza, coronaviruses, filoviruses, Lassa Fever virus, Rift Valley Fever virus, and Crimean Congo Hemorrhagic Fever virus.
With PEF1.0 scheduled to mature on July 2020, the World Bank, with the help of selected re/insurance brokers, is reviewing all aspects of the PEF 1.0 structure in order to make necessary improvements ahead of the scheduled marketing of the PEF 2.0 risk transfer mechanism around May 2020. To help in this task, the World Bank will look to partner with an expert risk modelling firm to conduct a series of iterative risk modelling exercises and, as needed, build a risk model which will underpin the risk transfer window for PEF 2.0.