Catastrophe: An assessment of disaster losses

Relying on the post-disaster funding is no longer a solution. It dampens countries’ proactive risk management. It results in under -insurance and as a result it increases countries vulnerabilities. Lack of liquidity in the aftermath of natural catastrophes caused by underinsurance and severely retards economic recovery. Large catastrophe events may entail years of unsustainable fiscal deficits and thus can jeopardize the countries chance for economic growth. The poorest segments are the most vulnerable to natural disasters in the absence of insurance, personal savings and effective mechanisms of targeted social assistance. In this backdrop, intensifying the catastrophe insurance as part of ex-ante risk financing rather post-disaster risk management is need of the hour in the light of the past disasters all over the world including the recent disasters in the Japan. This effort greatly reduces the Government's fiscal exposure to the adverse consequences of natural disasters ensuring the stable economic growth and fiscal management. It provides sufficient liquidity to the government and households immediately followed by a natural disaster thus greatly facilitating economic recovery andaddressing social inequities particularly in the most vulnerable areas.