 So welcome back everybody after lunch for us here in the room for everyone who is styling in. I don't know whether you had lunch or breakfast or dinner or whatever. Great to have you back here. We have about what I just heard about 150 attendants here online but also in the room. So altogether a very good attendance here and I'm very grateful that you're here today for this session. Now the first panel that we had before the break focused on what the insurance sector and capital market initiatives can do to reduce the climate insurance protection gap. And the focus of this panel is now the role of the public sector in bolstering resilience to extreme weather events and climate events. Now we cannot divorce the discussion of the insurance gap from discussions of government liability since whether implicitly or explicitly the public sector tends to hold the residual risk of extreme weather events. Without action to address the insurance gap, the public burden is likely to increase as climate change is expected to increase the number and severity of extreme weather events. In the absence of private insurance to finance the rebuilds and compensate losses, governments are expected to step in. This expectations of public support can inhibit the private take up of insurance as such and as such is a really well known example for moral hazard. The impact on government finances is twofold. First, there's higher expenditure on reconstruction. But second, a slower recovery from uninsured events means lower tax revenues for governments and higher spending on certain categories such as unemployment benefits. There is an impact too on inequality, since catastrophes tend to have greater impact on the poorest and more vulnerable in the society. The public sector is not only the holder of residual risks but can also have an important role in facilitating private insurance markets and risk sharing. Examples given in the discussion paper include setting standards and regulations, which can encourage effective adaptation to the impact of climate change and stimulate private risk insurance. The public sector can also facilitate the developments of instruments that enable more effective risk sharing such as public-private partnerships and catastrophe bonds. Both can help to reduce the public share of losses arising from extreme events. However, as the role of the public sector is more concretely defined, efforts will need to be made to avoid moral hazard appearing elsewhere. More broadly, a more integrated public approach to dealing with extreme weather events will be needed. Ideally, governments should balance the costs and the risks of ex ante or ex post spending on extreme weather events in a clear and considered way. These considerations might also include identifying which risks the private sector should ensure, which risks the government will ensure and possibly where will need to be a managed retreat. Such an integrated strategy will not only prepare the public sector itself but can also inform private actors. The discussion paper presented today also includes the possibility of European governments helping each other in this area. While this obviously requires political will, it seems pertinent to explore potential benefits of such solutions as the consequences of climate change stretch across borders and policies. Reducing the impact of climate change might thus be considered a European or even global public good. In their paper, ECB and IOPA set out some ideas how such solidarity could be designed to be effective. In advanced economies, such as the Euro area, the fiscal impacts of extreme events may have so far been modest. However, with climate change, the past is not a good predictor of the future. We thus need to think about these questions and about how to put in place robust frameworks before the effects of climate change become all too visible. With this, I would like to turn to the panelists that we have here. I'm very happy to welcome four distinguished speakers whose expertise and different perspectives will surely help us develop new insights on these questions. The first panelist is Iku Suahi Iahen, Secretary General of the Insurance Development Forum in London. This is a public-private partnership led by the insurance industry and supported by the World Bank and the United Nations and other international organizations, aiming to enhance the use of insurance to build greater resilience against disasters. So welcome to this panel, Iku Suahi. Thank you. Then we have Olivier Maroul, Global Lead and Program Manager of the Disaster Risk Financing and Insurance Program. This program is a joint program between the World Bank and the Global Facility for Disaster Reduction and Recovery and is supported by donor partners. The program provides advisory services on financial protection against the natural disasters in more than 50 countries, mainstreaming disaster risk financing and insurance within the broader disaster risk management and climate change adaptation agenda in developing countries. So thank you very much Olivier for being with us today. Then we have Robert Muir Wood, Chief Research Officer of Moody's Risk Management Solutions. In this function, he works to enhance approaches to natural catastrophe modeling, identify models for new areas of risk and explore expanded applications for catastrophe modeling. He's also the Vice Chair of the OECD High Level Advisory Board of the International Network on the Financial Management of Catastrophic Risk. So Robert, welcome for being here. Great to have you on the panel. Don't see him yet, but maybe he can put on his camera then later. And finally, we have here in the room Deborah Revolta, who is the Chief Economist and Director of the Economics Department in the European Investment Bank. It is in her department that the EIB Investment Report, which is the flagship publication on investment in Europe is produced. And this is also running the EIB Investment Survey targeting on an annual basis more than 12,000 European firms. She's at the heart of investment in Europe and I'm very grateful that she is here today. So these were our four panelists. And after these opening remarks, I would like to invite now all of the panelists to give a short introduction into the topic. And Deborah, the floor is yours now. Thank you very much. Deborah brought some slides so we can share them now. Thank you very much. And it's really a pleasure to be here today and to also be physically at the ECB. And it was really a pleasure also to read the report, which I found a very interesting and bringing a very interesting point for reflection on what to do next and what should be the rule of the public sector and how to develop this further, this rule. In what I am presenting, I prepared a few slides and actually there are two main areas that I would like to touch. The first one is I would like to bring some additional evidence on the challenge in terms of exposure to physical risk using what we have at the EIB. We build a climate of physical risk indicator for 180 countries around the world. And then some more evidence on what is the physical risk exposure for European firms and municipalities and the fact of access to finance based actually on surveys that we run on an annual basis at the EIB. And then saying that I would then speak a little bit more about what I think is the rule for public sector and particularly the EIB experience. On the first evidence, the first point and very much corroborate what it was already presented in the paper and I guess already discussed this morning. If we built at the EIB a model to assess the exposure to physical climate risk for 180 countries is a comprehensive toolkit that we developed in also because we wanted to be sure of what is used to assess the exposure to risk and also how the data are accounted for and aggregated. We were looking at the models available in the market and we weren't satisfied of the black box nature of many of these toolkit. So we actually worked trying to get all the information that we could and then re-aggregate. When doing so, we looked at the effect of damage due to extreme weather, agricultural losses due to the stress, the cost of protecting for sea level rise, cost of upgrading infrastructure, productivity loss due to heat, economic loss due to weather scarcity. We re-aggregate all of these and we have a measure at the country level of the exposure to this risk. And then on the other side, we always said so that it's important also to have a measure of the adaptation capacity of countries and there very much the fiscal situation of the countries come in, so the economic ability to respond and the institutional capacity come in. What the message that I want to give and it's basically the result that you see from this model is what you see in the map and darker color are countries where the physical climate risk indicator is very, very strong. And it's because the darker, the most important exposure to risk, basically that there is many of the emerging market and low income countries that are also those that have less capacity to respond and to adapt those most risk. So globally we have an issue and there you can see the different elements on the left side is where damage costs are actually recorded and up and the effect of the exposure losses and on the right side the relationship between the exposure to the risk and the adaptation capacity. And again what you see is that actually a lot of the countries that are more exposed to the risk have a very little adaptation capacity. So in reality you enter into this problem globally of a mismatch between the exposure to the risk and the capacity to react to the risk, which is a confirmation of the importance of all of what was discussed in the paper as well. If we look at the European case instead and that's additional evidence that come out from our work, the first graph comes from our survey of European firms. We interview every year 12,500 firms in Europe and since a few years we added a few questions on the exposure of firms to physical risk and then what is the firm doing in terms of reacting to this risk. And we ask whether the firms is having a strategy, is implementing a specific measure, but we also ask whether the firm is ensuring. And what we find out at the firm level is that 60% or so of firms in Europe have experienced physical risk and have experienced losses related to physical risk. But more or less 10% of firms are insured and they find it interesting because it's very much the same in a different model with different data in the paper you come to very similar number. What we can do is also having granular information at the firm level, we can understand which are the firms that are more likely to invest to insure, so to cover the risk. And their size definitely have an effect also having already experienced losses due to physical risk is a motivator for firm to insure, but there is also a very strong geographical variety. So there are some countries in which firms tend to insure and other countries in which they would never insure. So you have a lot of firm level differentiation also in terms of what the firm are doing. We have a similar study done on municipality there every two years we interview 800 municipalities, we come out that more or less 90% of municipalities in Europe tell us they experienced losses due to physical risk. So you ask if they are doing something out of it, mostly since that they are starting to look into adaptation when they develop a new infrastructure, but they are not super active in terms of adaptation as well. And in terms of insurances at the municipality level remains very small as well, which also decides a strong driver of adaptation of insurance or sorry at the municipality level. So what you see both for firms and municipalities, a lot of maybe physical risk start to be experienced, but there is a very, very low take up of insurance product, both for firms and for municipality at the European level. We were also looking at the banks actually we have a study that looks at what are banks doing in terms of reconstruction support and what we see there we have we mix the survey data on firms with the behavior of the banks. What you see is that actually firms basically after an event they try to get a credit but they are likely to be they are less discouraged in asking for credit, but they are much more likely their credit application to be rejected the most probably because a post event that they may have a lower collateral. So the banking sector may not be the best allies for the reconstruction. And in fact, part of the story is that at least at the European level, there is a lot of pushback to the government to the state to be the lender of last resort if you want for the reconstruction side. But it brings also to the adaptation part that a lot of the burden is moved to the public sector on the adaptation side. Saying that I come to the point of what can the public sector do and mostly I would like to say something on the AB experience that the AB is is a public institution, it's owned by the European member states is an institution that is actually landing. Lately, we just turned to be the climate bank so very much with a strong green agenda, both in terms of our landing for mitigation of adaptation and overall commitment that I don't enter into all the details of what we are doing. Just want to say that we started the rising our ambition on adaptation where in Europe actually investment in that station is extremely low. And also on our side it's a 5% of our climate action landing with an ambition to go to 15% but in reality there is a very little going on in terms of adaptation at the European level in terms of investment. We think that there is a strong rational to intervene because the market failures related to adaptation are quite important. Normally it's perceived as being a public good so need for public intervention and it's very rare that the pub private sector would look into the adaptation if not to the if not in some cases or new be a new construction to make more resilient. But the big part of the adaptation effort is considered to be still a public good to be produced by the public sector. There are a lot of externalities that are not internalized in the moment in which you act at the private level. There are some interesting examples if you think that if you pave your if you have an hour and hours and you pay the place where the place where you pay parking your car. You have a negative externalities in the sense that there is no more drainage of water. So you create a negative externalities that is not a price in the moment in which you do that. So you have you have actually again a motivation for considering it as a market failure or need to have the public sector producing lack of information and a symmetric information. There is not always a binding regulation and on the public sector side. It's often easy to those are investment for adaptation that are always often easy to be the prioritize in the moment in which a lot of pressing investment comes in. It's not the right thing to do. We know but if the pressure if you think of the the short frame of the electoral campaigns and electoral period. Something that has a risk every 20 every 30 every 14 years is something that you may be prioritized in your investment plan. So there is a strong rational for a public sector rule. At DAB we see our rule mostly on the adaptation side. Rising awareness is trying to have we have a new policy for a smarter and faster adaptation to try to have adaptation in every project that we finance. We have it in the technical assistance of our own project. We always look at it and we have also what we call emergency financing. That is a normal line of business that we would do after emergency. We would finance the reconstruction very much with a private and public sector financing reconstruction. That means that we charge our funding cost triple a funding cost in favor reconstruction through it with very long maturity and support. So at the European level there is some way of emergency financing through lending activities coming coming from our side. I think for now I would stop the if I ever to summarize all what I was saying very much share the focus on the risk and the fact that there is a very little going on in terms of insurance. If I ever to think at the rule of the public sector there is a strong rule of the public sector. I see very much also in terms of institutional involvement a lot of a very strong rule for more action in adaptation with the public sector intervening. And that's partly what we are doing. I think the discussion on the insurance is very interesting but I think the point is to understand where is the balance between what the insurance sector should be. What is the residual rule of the public sector and the moralizer between the two is very important to address. Thank you. Deborah I mean that was very very insightful and I think we will come back to exactly this question of the moral hazard and what should this actually the public sector do what should the private sector do and how we can make sure that these trade offs that are there. That they are at least you know that we think about them and try to address them. Now, my next speaker is Ekto Zairey. I give you the floor now for your opening remarks. Thank you. Thank you very much Christian and also Deborah for such a comprehensive. I think context setting for the discussion. I think the role of insurance and supporting economic growth has received increasing attention over the past few years as Deborah mentioned. It's value in terms of disaster risk financing and disaster risk mitigation services has really come to the fore when we think about climate change and some of the conversations that are happening there as relates to adaptation as was said earlier. But even beyond climate risk as we all know the insurance plays a critical role in terms of addressing life health risks and also in supporting humanitarian response aid, etc. And there's increasingly a nexus in terms of the concerns that we are seeing in terms of climate risks and that function that insurance industry also please naturally I don't think I need to state this but as a cornerstone of the economy. It provides critical social safety nets and particularly for vulnerable populations. But the reality again as Deborah had referenced is that there are significant risk exposures and losses that are occurring and we expect to increase that are not covered by insurance but could potentially be. And this takes us to the whole question around the protection gap. The reality also is that the protection gap exists in every country developing emerging developed. But the reality is that they are greater in emerging and developing countries where the consequences of uninsured risks can be even more severe and long lasting because of a lack of personal or state resources to meet these losses. The same principle obviously applies in developed economies where you have huge swaths of vulnerable population who also don't have the depth in terms of financial protection that are needed when we think about climate change and the risks that we see on the horizon even today. Sadly the consequence of this is that we have limited resilience across the board. But we are also seeing the disasters increasingly play out every day from the experience in Italy. A few months ago we saw the experience in Malawi in Mozambique and almost a sort of numbness that has crept into the system in terms of how these disasters are evolving and how an urgency around responding to them. So from our perspective, there is a significant amount of work that we believe that the insurance industry can obviously do in terms of helping to address this issue. Yes, it's in terms of investing in more innovative being a bit more creative in terms of the risk financing risk mitigation products that are on offer. Perhaps some of the products that are offered to corporate clients we can increasingly expand and make that available more to our public sector counterparts. But this also points to the important points that was mentioned earlier, which is the power of governments is also important when we think about closing the protection gap and public-private partnerships are especially critical here. Again, reflecting on COVID-19 climate change, what we've seen I think in the population if we listen and are listening to people is a surge in terms of an increase in risk awareness. And with this I think is coming a corresponding need for an appreciation and demand from the public in terms of better financial protection and risk sharing systems. I believe that insurance has an important role to play here. And so from the perspective of the insurance development forum, which as you mentioned Christian earlier is an initiative that is led by the insurance industry co-chaired with the United Nations, as well as World Bank Group. So I'm pleased to see Olivia here. We have as our mandate the objective to expand and optimize the use of insurance to help drive resilience. If it's at the individual business level precisely for what was mentioned earlier, the fact that we are talking about in developing countries three to five percent insurance penetration rates. So its function as a shock absorber is quite limited. And so for us, we believe that this is why we must engage and we have been increasingly doing so with the broader policy discussions that are taking place around climate resilience and adaptation. And really trying to push the boundaries in terms of the role that insurance can play in terms of financial protection given what we are seeing in terms of the impacts of climate change. We've engaged heavily with the G7 and we've seen it emerge in some of the communique around the importance of risk transfer and financial protection. We've engaged with the V20 countries with the G20 and we see a rise of this topic on the agenda politically. But for us, it's also important that we move beyond just discussion and recognizing this as a problem. So actually investing in the solutions, right? Actually getting to implementation, being innovative, experimenting, exploring what the solutions could potentially be. And for us, that means exploring again, how do we deepen understanding around these risks and deepen national capabilities to manage and understand these risks? How do we develop or engage with regulators around the development of insurance markets that could play a much more robust role within these markets? How do we again invest in the development of these solutions if it is an inclusive insurance working directly with governments on their risk financing strategies? But also thinking of insurance as institutional investors and what are the opportunities to invest more in infrastructure and emerging markets? So for us, this is an important and critical agenda. And so we are pleased to obviously be part of this conversation here today because we believe that the consequences are profound if we do not tackle it. So really, thank you, Christian and the team for the invitation to be part of this discussion. Great. Thank you very much. Actually, our next speaker would have been Robert, but I think he has problems connecting. So I would give the floor now first to Olivier and the floor is yours for your introductory remarks. Thank you, Christian and colleagues. Hope you can hear me well. Yes. Perfect. Great. So first of all, thanks a lot for the invite. It's of course a very hot topic. Even in the context of the World Bank and I'm going to take the perspective of emerging developing economies to make some balance what Deborah was talking about for more advanced economies. But as we mentioned, the protection gap is there. The question, of course, is how you can fill it in. So from the bank perspective, of course, this topic of disasters and climate risks are quite important because it does impact development. It does impact poverty reduction. Just a few numbers to keep in mind. The average annual losses related to disaster estimated about 300 billion dollars. If you take into account the indirect impact, including consumption losses, it goes to up to 520 billion dollars a year. And following COVID and the last three years, the number of people falling into extreme poverty raised by about 70 million. So this is definitely something that we need to tackle. And of course, the recent earthquake in Syria and Turkey with more than 30 billion dollars of losses is also a good example that we need to do something where I think in that context more than 5 billion dollars of losses were insured. So it gives you a sense in that context of a large protection gap. So from the bank perspective, examples of this kind of public private partnership and this is something we've been doing for a long time. One, because countries do have severe budget constraints. So they need to be very careful on how they use their public funding, but also the World Bank itself, as many other development agencies do have limited balance sheets. So we need to mobilize. We need to leverage private capital. And as I mentioned, the question is not whether we should do it is how we should do it. So in the context of the bank, we've been doing that in, I would say, in three key points. One is to, as I said, leverage our public funding. For example, over the last 15 years, we have developed a contingent line of credits to be disbursed in case of disaster. This is public funding, but this is very much important not only to provide emergency liquidity right after disaster for emergency response, but also because it allows us to engage before the disaster with countries on disastrous risk reduction and disastrous management. So it's a good financial incentive for countries and particularly minister of finance to engage on disastrous management before disaster cure. And now, as I said, this is clearly not enough. And just to give you a sense, the total envelope that we have allocated to this, what we call caddy do this line of credit is about four, four to five billion dollars. It's a it's a small amount compared to the needs. What we've done in parallel is also try to leverage private capital, one in helping countries to work together. And we've helped develop some risk pools, whether it's in the Caribbean in the Pacific or now it's in Southeast Asia. So it's also way to four countries to access capital markets in goods in on good terms. And the World Bank has also developed its own CAD bond platform where again we've been helping countries, mainly middle income countries to access private capital and to use sophisticated products like CAD bonds to to increase their emergency liquidity after disaster. And of course, the question is, is not only to use those tools, but also to be able to combine those products, those instruments to make them as efficient as possible. And I think the key point we need to discuss is clearly to go beyond products and to think of strategies. What are the optimal strategies countries should put in place to protect their own budget, but also to protect households, to protect businesses and to protect farmers. Three key messages I'd like to highlight if you allow me in a few minutes. And those messages come from a technical contribution which just produced on behalf, I mean for the Japan as chair of the G7 process. The first one is that we have to be optimistic and I think it goes way with share their views on that one because the topic of climate and there's finance is playing an increasing role in climate change and adaptation. And if you look backward, that even five years ago, the topic was clearly not as important as it is today. So this is a good news. The second good news is that I think collectively, together with the private sector, we have made significant progress on climate and disastrous finance, whether it's on the policy side, on the technical side, and on the operational side, including some pilots or even scaling up some some programs and I can give you a few examples. And the third message I'd like to convey is that when we look forward in terms of the priorities, at least from our perspective of the World Bank, this is very much on one setting of the right institutional setup. Because if you want something to be sustainable and effective and impactful, it has to be institutionalized, if I may say, in the broader context. Two is to facilitate access to private capital and there are many ways to do it, including to private private partnerships. Last but not least, and particularly in developing economies, this is very much around short developing short responsive systems. On top of financial, I would say financial preparedness and insurance is one of the instruments around financial preparedness. It's very important to help countries be prepared on the operational side. Practically, to make sure that the funding doesn't get stuck somewhere, let's say in Treasury or, you know, and they're not being fully, I would say, disbursed to the ultimate beneficiaries. And from the bank side, we've seen challenges not only in the financial preparedness, as I just mentioned, but also in the operational preparedness because SimSense are not in place. In developed economies, you can count on the private sector sometimes to pass the money from, you know, ultimately from financial markets to the ultimate beneficiaries through insurance policies. In developing economies where the insurance, domestic insurance market is clearly underdeveloped, you don't have these kind of channels in place. So you need to combine that with some public channels like social safety nets or any other means that will also help the ultimate beneficiaries to access this funding. Last but not least, and I'll finish on that point if you allow me, one of the big distinctions I would make when we talk about insurance in developed versus emerging and developing economies is about the development of the domestic insurance markets, which is clearly underdeveloped in those developing economies and which again creates significant challenges to protect the ultimate beneficiaries. So one of the key challenges we're facing is again not only to access capital and international capital, but to make sure that we can also develop domestic capital, domestic financial markets, domestic insurance markets that ultimately will provide the solutions, at least part of the solutions to the reduction of the protection gap. So let me stop here. Thank you. Thank you, Olivier. Now I see that Robert, you managed to log in. The floor is yours for your opening remarks. Okay, thank you. I wanted to give a little bit of history to this subject. So in the USA through the 1960s, after big uninsured flood damages from Hurricane Betsy and Camille, the federal government tried to get the private insurance sector to cover the risk, but insurers did not know how to price flood risk or anything about tail losses. So private insurers declined. By the late 1960s, the government had to come up with their own scheme, the National Flood Insurance Program, the NFIP. The FEMA agency, Federal Emergency Management Agency, spent hundreds of millions of dollars on mapping the estimated historical one in 100 year, 1% annual probability flood zone, including working with local communities to accept the map. Today, wealthy homeowners hire flood engineers to contest the map because falling into the flood zone devalues your property. Initially, few homeowners bought flood insurance. So in the 1970s, the government made it a requirement that anyone taking out a government-backed mortgage or home loan whose property was inside FEMA's 1% flood zone had to buy NFIP flood insurance. However, the banks only checked for insurance in the first year so that the proportion with flood insurance lapses at around 25% each year. In the UK from the 1960s, comprehensive flood cover was added to fire insurance, even after big flood losses as in 2007 insurers committed to a few more years of flood coverage within fire insurance, as long as the government committed to spending even more on flood defences. By 2010, what undid both the US and UK schemes was high-resolution probabilistic flood risk modelling. This opened Pandora's box of flood risk quantification that could never be closed again. It made possible cat bonds for flood. I worked on the first one for European flood risks. It made possible building specific flood risk underwriting insurers could cherry pick the risks. In the US, the NFIP had to run to the federal government to get bailed out because they weren't collecting enough premium, in particular in 2005 Katrina and 2016 Harvey. In private insurers in the UK, it was now possible to price the flood risk specific to that property. Those at highest risk might be charged more than 1% of their property value for annual flood insurance. Meanwhile, the owner would write a scathing letter to their Member of Parliament and to the press complaining how unfair this was to the point that the government was forced to take action and come up with the flood re-concept. Which involved identifying those at highest risk above some model threshold. Flood re-insures this pool while all those at lower flood risk pay a small levy to reduce the premium cost of those at high risk to a tolerable maximum. Buildings constructed after 2009 cannot be in the subsidized pool while the whole scheme is intended to taper away by 2039 by when high flood risk to domestic property is meant to have been adapted away, but we shall see. For now it seems to be working quite well, but we have not seen a significant flood catastrophe since it was launched. But it is not linked with adaptation, which is a topic I think we'll come to later in this discussion. I read the EIOPA report with interest concerned with the protection gap, but mostly focused on new opportunities for creating multi-country risk pools or designing innovative cap bonds. However, there seems to be little in the report on what is the most central to the protection gap, the need to get more people buying insurance. If the take-up rate is currently 25% of the risk, how do we get it to 90%? There is reinsurance capacity for European risk already, so it is not a consequence of further pools or cap bonds, although they could both be useful in reducing the costs. We know what it takes to increase protection to 80% or 90% of the risk. It is not as simple as making fairly costed flood insurance available for all properties as the US experience shows. Either you make the coverage mandatory for everyone taking out a home loan, or you add the coverage to every standard fire policy, or you do both. These are the only ways. I would like to see more on these specific policy instruments could be applied around Europe. They already exist in France and Spain with government intervention, but without enough linkage to risk reduction and adaptation. Which of these two instruments are different European countries willing to adopt? Thank you. Thank you very much, Robert, for these also historical insights into how insurance has developed. I mean, we are now ready basically to open up for more questions. And I would suggest that given in the interest of times, I will sort of ask all of you one particular question and then we open up the floor to the audience if they have further questions. So that we make it more interactive. Now, I would like to address my first question actually to you, Deborah. Where do you actually see the role of the public sector and public banks in supporting adaptation? And how do you see the role on developing the cat bond market in the EU? Thank you. Thank you very much for the question. And I think on adaptation, I think I see a very strong role on the public sector. I think what I was mentioning before, I think we are talking about a public good with a public sector intervention, particularly on the ex ante part or on adaptation side. But at the end, there is a lot of residual rule on the public sector in terms of intervention for the uninsured component. Then I very much agree on the point that if we want to expand the insurance, probably the way is to go towards some way of mandatory insurance. I don't know how it could be done. And I suspect at the European level that would be complex in terms of finding something that is valid in all member states in terms of making these insurance in these insurance mandatory. But I think at the end that the important part is to make sure that the public sector, that if you want as a responsibility ex ante on the adaptation side, not only I think on the adaptation side should be private and public sector, but the public sector remains with some responsibility as providing public good. The public sector also has a responsibility at the end of the process for the uninsured part. What you have to make sure is that the public sector is not also backing in the way in between the private sector and at the end accumulating too much responsibility. But actually that intervention on the insurance part really takes out the burden on the public sector exposed. So that's on the one side. On cut bonds, I was trying to look into what we are looking at at the European investment bank. Actually on cut bonds, we were not looking at cut bonds for our traditional, for our European business, but most for our business out of Europe. We are not yet there in terms of entering in the cut bond market in the part where we are looking at and I was talking to my colleague more directly involved. There is still a lot to do with data and modeling, particularly because most of the risk that are being currently covered and addressed are mostly US based risk and US based models. There is less on the other areas in which we would enter in the market and we don't feel that we have the expertise in ours and even funding expertise in the market would be difficult. The legal structuring is still extremely heavy so also on the operational side, my colleague were addressing the fact that some kind of standardization and simplification in the legal structuring would be important. And then the point that is also made in the paper actually of the value of diversification of these investments where in reality the pool of potential investors is extremely limited. And then at the end, yes, maybe they diversify on the risk, but then you end up with the risk concentrated with a very limited pool of investment stores that may have entered into phases of investment appetite. So you may have a market that dries up quite easily, quite fast at changing market conditions. So that's where we are, where the cut bond market really seems to be very early in the development we are looking into it, but not yet happening. Thank you. I think with your answer, it kind of gives a nice transition to a question that I had actually for Olivier. I mean, what can the public sector do in order to facilitate the inflow of alternative capital for underwriting catastrophe risk to increase risk sharing between the public and the private sector? No, thanks for this question. As I said in my comments from the bank perspective, it's very much around private capital enabling and private capital mobilization. And cabins are one of the many examples we need to explore further to deal with this kind of protection gap, particularly in countries developing and emerging economies that are clearly financially constrained. So again, in that context, I will make a difference between mobilizing, I would say, domestic capital versus mobilizing international capital. And they are two different stories. On the latter, and again, the Cadman is a good example, I would definitely agree with Deborah that those tools tend to be quite sophisticated. They do require some significant upfront investments. And from the bank perspective, although we've been promoting that to some extent, it does respond to very specific needs. Usually middle income countries, very specific risks like earthquakes, hitting a capital city, very, I would say, high return periods. So this is very much for us a type of instrument to cover your excess risk, your top risk if you wish. Now, below that, there is still a lot of work to be done to make sure that even if you don't face the kind of 200 year earthquake event in your country, you can deal with a five year flood event. And sometimes this is where we do see some challenges in some of the countries that are not fully prepared in fact to deal with this kind of events. And usually those kind of recurrent events, which are not as well defined as earthquakes are not so attractive for the private sector. One, because the understanding of risk is much lower. And two, because the costs of those instruments, because of the low return period would be pretty high. So this is where you need to think in terms of risk layer approach, thinking of being able to retain as much as possible when it makes sense. And then transfer only the excess risk and then you can then tap into, I would say, traditional insurance market or alternative alternative capital like cat bonds or like cat swaps, which again, from our perspective, do remain more kind of exception than the rule because of the concerns as just described. So key market inefficiencies, I would say one is, and I think it was we mentioned that already that are analytics. Do we have the right data, not only in terms of the hazard, but also in terms of the exposure. When we engage a dialogue with a client with a country, the question is, what do you want to protect? And of course, you cannot afford protecting everything. So you need to prioritize. Do we have a good sense of your exposure? I would say implicit and explicit, I would say content liability related to disasters. So what is your priority? Is it better for you? Or do you want first to protect your key public assets? Or do you want to protect your infrastructure? Or do you want to protect your low income and vulnerable people? Some decisions will have to be made because again, funding is limited and a proper, I would say risk assessment and data analytics can be quite important. And I'm sure that you will elaborate on the global risk modeling alliance. One of the examples where the private sector and the public sector are trying to work together to provide this kind of sophisticated solutions. The second one I would say is, again, in order to tap into alternative capital is to try to act as a risk aggregator. It may not make sense for a small island in the Pacific or in the Caribbean to access the market on its own. It does make sense for them to access as a group, because first of all, you can create some economies of scale and also because you create a critical mass to be more, I would say, better equipped to discuss with investors. Because of course, you bring a larger amount to be to be insured and larger business opportunities. So playing with this kind of risk aggregator, aggregator rules, risk pools or platforms that some development bands like the World Bank have developed, does also facilitate access to market and also does also allow to standardize as much as possible some of those products as Deborah mentioned. And last but not least on the legal and regulatory framework, which is quite important going back to the kind of, you know, the basic policy policy agenda, where again in some of those countries, cash insurance is clearly not properly, I would say regulated in terms of capital adequacy, for example, and you don't want to end up in a situation where you would promote, I would say, a catastrophe, catastrophic insurance, I mean, in some cases make it mandatory when you know that the domestic insurance market is not properly equipped to pay the claims on time in full. So again, it has to be very carefully managed again to make sure that you don't end up in a situation where in fact, payments will not be made insurance claims will not be paid in full. We've got many examples where it has happened. So again, this kind of proper legal and regular framework is also quite important also when you think of bringing more capital including alternative capital solutions. I'll stop there. Thank you. Thank you. Thank you very much, Olivier. And I would like to address the next question actually to echoes IE because I think you mentioned something that I think you have also some experience with namely this question of these how multinational risk sharing could actually work. And this is a question that I would like to address to you. Are there any relevant examples of multinational risk sharing mechanism in developing countries that helped build up resilience against catastrophe risk? And what are the main challenges related to that? I mean, you see in our paper, this one part of it was exactly this kind of you solidarity and maybe you could say something on how this has actually worked internationally. You are still muted. Okay, sorry. Yes. Yes. Thank you very much for that question. Yes, there are a number of examples. I think that we are seeing emerging of multiple countries pulling risk into single portfolios to try to access capital essentially to help them deal with the impacts of these disasters. We have the Southeast Asia Pacific risk pool. We have the Caribbean catastrophe risk insurance facility which the World Bank was involved in establishing. There's also the African risk capacity, which is basically an insurance fund for the African continent. And maybe I will just focus on that particular one because I think it's quite interesting. And it is a situation where there was a very clearly defined objective for this mechanism, which is a risk pool that would help the government's finance response to disasters after with a specific focus initially on drought risk and tropical cyclones. And through that mechanism, the countries on the African continent pool their risk into a single portfolio. I think there are about 35 or so countries who are members of the art. And out of that there are a number of countries that pay a premium. In addition to that, beyond the multi-country nature of it, it's also backed by parametric insurance instruments. The reason being that for many of these governments, there is a premium placed in terms of financing becoming available as quickly as possible once the event occurs. And so again, this is I think quite important when we think about these mechanisms, really trying to respond to the needs of the countries and the communities on the ground. Another I think critical dimension of the pool that could be instructive was that it was not just simply the development of an insurance solution. There is a critical component that involves working with the governments to address and build greater transparency around what drought risk means for these countries in terms of impact on the governments, but also impact on individuals. And particularly communities that are dependent on agriculture as a source of livelihood and that's a significant population on the African continent. So there's a risk analytics dimension risk modeling investment capability development that is involved in the establishment or in the operationalization of this mechanism. The second part of it that I think is quite important is that, and it's something that Olivia reference is if we are concerned with meeting the needs of vulnerable communities. There is an opportunity to use these instruments to proactively link finance with targeted response that gets to people when they need it. So part of the work of that institution is actually working with the governments to actually try to understand if your policy was triggered. How would that money actually flow from the insurance company through government systems out into response mechanisms directly to individuals. And this can be a complex process to map, but it's essential for efficiency purpose. It's also essential when we think about risk reduction and reducing the longer term deeper impact that these disasters can have when they they unfold. So I think that represents I think quite an interesting model, but each risk pool has its own specific characteristic that responds to the particular region, the particular governments that are part of it. And this is part of I think the thinking that we need to adopt as more governments think about these sorts of collaborative efforts. In terms of the challenges associated with structuring these instruments, I like to think of it in maybe three buckets. Maybe the first is the governance and institutional elements establishing these institutions. I think that part of the challenge is ensuring ownership, right, because this is a solidarity mechanism, right. And you had mentioned earlier over years, you might have a situation where there might be political change within a government and they might be a waning of interest in terms of understanding the importance of this mechanism. Or you might have countries that are not necessarily as affected by say drought risk compared to others and they might question their involvement. So that's a technical but also a political question that you really have to sort of grapple with in terms of governance. I think one of the important lessons or challenges that one could potentially encourage is paying attention to the rules of the game if one could put it that way. And that's tied to how do we treat to the transparency around consolidating perspective on what this instrument is about? What is this focus? How do we understand as a collective how to model that risk? How do we understand as a collective what this instrument is and what its purpose? How do we understand as a collective how it is supposed to function? And so there are lots of lessons that I think that one could unpack in terms of institutionalizing these types of mechanisms. The second component where I think there are lots of opportunities for lessons learned, not only challenges, is on the operationalization. So again, a lot of these instruments require multidisciplinary expertise. It's not just simply a question for the Ministry of Finance. It's a question for the Ministry of Environment, a question for housing, a question for education. And this is important because ultimately we are asking or we are going to involve some kind of government investment and tradeoffs, right? And so there is a need to be, I think, thoughtful about the stakeholders that are engaged in the development of these mechanisms because that also informs, I think, the quality of the institution or the mechanism that eventually comes out of it. And then finally, I think once we think about the governance, once we think about the technical operations that are required in terms of risk modeling and stakeholder engagement, is also the financial products and the affordability question, right? These are governments that are severely constrained in terms of financing. Many times the Ministry of Finance official will say, I'm not really sure about this insurance when I need to be investing in education, health, et cetera, right? And so there is a case that needs to be made, but beyond the case that needs to be made, there's also a question in terms of how is this actually financed? How do we layer different instruments? How do we understand the cost of these instruments? How do they reconcile with how the disaster is unfold and the longer term financing that is required within these countries? So I think that they offer considerable food for thought and I think, you know, and could be instructive in the work that's being done by the European Investment Bank and others around potential risk pooling mechanisms. But those are just some initial reactions, Chris German. Thank you. Thank you very much. It was very insightful. I have one final question to Robert. And I think you, you mentioned it already that there are of course also, let's say, different levels of the government, different players in the government. And I said it's different, let's say, different levels, let's say, from the municipality to the city to whatever area you would like to go. And Robert, my question is, what is required for an integrated approach to the financial management of disaster risk across all levels of government? And what is currently lacking in your experience? Okay. Well, thank you for the question. And actually, Ekusue and Olivier have done a great job at articulating the perspective on disaster risk financing, how it should be advanced, especially in Africa and the developing country. I actually want to bring this a bit back to Europe again to your initial report. I mean, actually just one comment on the question of cap bonds for European climate risk. I mean, the modeling is all there. The modeling is all there and the data is all there. In fact, I mean, it's been possible that there are cap bonds already which cover some climate risks in Europe, including European windstorm and some flood, I believe. And if there were ambitions to mount a cap bond program which actually covered a number of countries in Europe in the same bond, it would be clearly possible to do that. The models exist. They are fairly mature models. They are certainly good enough to support cap bonds. So that's just one comment to make. Second, I mean, one feature of, I mean, you've been asking about different levels of government, how they could become involved. I want to give you an example of a potential way of integrating a cap bond and infrastructure bond together. It was an idea which was kicked around. I'm not sure if it's quite ever been done. But the idea is if you have a community which is subject to flood risk and is already paying flood insurance premiums. So it's at some risk. It's not protected. There is some form of flood risk transfer, flood insurance already in place. Then it might be worth investing in building flood defence that would involve the municipal government. It might involve the regional government. But by building this flood defence, the money could be raised as a form of investment bond and the fact that the flood defence has been built means that the risk is reduced. So everybody needs to pay less for their flood insurance than before. And you could integrate these two together. You could make it such that in the first year, the investment goes to build the flood defence. And then over a period of five years, what was previously being picked up in flood insurance premium actually goes to support the investment required for the flood defence. And after five years, you've paid off the money raised for the flood defence and everybody can enjoy reduced risk. So this question about how do you make investments which are effective in reducing risk? How do you link those investments to insurance mechanisms? I think it's a very fruitful area. I mean, one challenge. I mentioned the sort of the ways of really reducing the protection gap around insurance mechanisms. One feature we need to be a little careful of is that if we have pure equality in terms of actually how the risk is distributed amongst people whose underlying risk is very different. So if we flat rate it as in France, for example, then the challenge is where's the incentive for adaptation to climate change? Because ideally you want an investment to have an effect on reducing those people whose flood risk is very high. And actually, in order to do that, there needs to be some differentiation of the risk cost originally. So that's a challenge which I exist, I think, for all ways of trying to link together an insurance mechanism as to how you design it, how you differentiate the risk, and the mechanism around adaptation and around investment from municipal governments, regional governments, national governments, which is going to reduce risk for the population as a whole. Thank you very much, Robert. I would like to ask now, Margarita, whether there are any questions also in the chat and also would like to open up the floor. If there are people who would like to ask a question here from the audience, maybe I give first preference to the people here in the room. And I see somebody raised their hands, Miles, yes. Many thanks for your conclusions today. Lots of you gave positive views on introducing PPPs. Our report talks about principles about how to introduce these private public partnerships. It doesn't go very much in design details. I wonder if you had some views on what the good design details would be for such PPPs. Who would like to take this question? I can start an answer. I think one question for design of some mechanism is this question about how fair is it around the underlying risk? For example, supposing you had the ambition to set up a risk pool, a flood risk pool across 12 countries in Europe, then how do you balance out the cost to that? I mean, ideally, I would say you've got to evaluate what the flood risk exceedance probability curve looks like for each country on its own. And then look to see what happens as you pull this risk across multiple countries. There will be events that cause loss in more than one country at the same time. There will be events that cause loss in single countries. But in order that it's fair, it has to be seen to be fair to work. If one country believes that other countries are doing very well and it is not doing very well, that will lead to problems downstream, as they say. And I thought the report actually didn't go into a lot of detail about what a fair mechanism would be. I mean, I would say it involves looking at the risk cost, looking at the tail risk, looking at how that is affected by pooling multiple countries and then establishing, based on the underlying technicality of the flood risk, it would determine how the costs should be allocated one country to another. And then I think the system itself, you need to revisit this every five years to see if your modeling or your experience or your data is shifting. Maybe in one country, people are building houses in high flood risk areas. We need to check the calculations that are already done. But I think that if you had that kind of mechanism, it could work quite well. Maybe I can add to that. I completely agree with the comments made by Robert. I think, you know, from my perspective, and it's into the question that I think was shared with us earlier, was be clear about the objectives of the PPP. Sometimes we have, you know, these grand ideas and if you are not clear on what this mechanism is supposed to achieve, it could end up doing a lot of things and nothing at all. The second element I think is on the engagement of stakeholders. And I think this connects with some of the things that Robert had mentioned, which is that we need to engage stakeholders, not only from a government perspective, but also from a public perspective, right? If it is civil society, because that is about building a more comprehensive picture of what that risk and understanding what that risk is at a community government level, but also trust in the mechanism, right? And that is in turn also linked to the governance element and the governance is important for transparency and understanding. I think in PPPs, there's also a need to be more thoughtful about aligning incentives between public and private, right? There are things that make PPPs work for public sector and for private sector and certain things don't work, right? And so I think being very clear about what these or aligning these incentives are upfront is an important part of it. And I also think fostering long-term commitment, addressing the protection gap is not a short-term thing either, right? So how do we manage that in changing political contexts? And that's tied to the governance. And for me, and I'll end here, is investment in capacity building. We sometimes, I mean, we're technical communities that are engaged in, okay, the risk modeling maybe on, you know, some of the contingency planning side. But there is a need to really share skills between public and private sector in terms of tools, evolution of tools, so that we can become also a lot more innovative in terms of how the PPPs respond to what is a very complex landscape. If I may, maybe one comment from my side and again coming from the developing economy perspective where the public sector is very, very limited fiscal space. So when you think of PPP, we need to be extremely careful what to recommend because again it could otherwise create some sort of open fiscal exposure. As Ecosim mentioned, it's a means to an end. So I think it has to be very clear what are the priorities of the government. And from a more economic perspective, what are the key market failures you're trying to address? Because if the market was to be efficient, you will not, ideally you will not need some public intervention. And then the public intervention can be many faults. We tend to focus quite a lot on premium subsidies, for example. But there are a lot of market inefficiency that can be addressed in terms of data access, in terms of, you know, the basic risk market infrastructure, which could be pretty heavy upfront costs, but then of course will not create this kind of, you know, fiscal exposure that the government will have to deal with. But again, from our perspective, this is very much to be very specific on their priorities when we engage with governments. And then to clearly identify where the dollar to be provided by the public sector will leverage additional private capital, the dollar provided by the private capital. And it's sometimes a very difficult equation and very much country specific, even project specific. You want to say something or should we give the floor to We can give it. Yeah. Okay. Margarita, do you have any questions from the audience? Thank you, Christiane. Yes, we have one question from Charles Lowe from Firmah. And it's related to what Robert said earlier about the need to increase the take up of private insurance. And he says that may be more options than the two that Robert listed, which were making it mandatory or adding it, for example, to fire coverage for households. So what about, for example, incentives from the public sector can also the other panelists think of any other ways. Thank you, Charles. I can say something actually that we had a discussion over the lunch break. One idea that came out was to actually add it like a mandatory insurance, adding like a tax on the real estate property or something. And then you could have the tax that the force you to ensure and you could have. Then if you ensure you could have some discount or something like that. Yes, Olivier, you also wanted to say something on this note again. That's a very, very important question indeed. I think from the bank perspective, we always very careful about tax and mandatory solutions. They tend to be, I mean, difficult to want to pass if you pass the law, but also to enforce. If you take the case of the Turkish catastrophic insurance pool, which is well known, been reading for 20 years with a mandatory law. At the end of the day, the take is not as high as it could be. So it does create also some challenges in terms of enforcing those mandatory requirements. You have examples like in France or like in Morocco, where you try to link this kind of mandatory guarantee or catastrophe within a voluntary property insurance product. But of course it does require that your basic domestic insurance market is well developed. So it's really depend on the on the context. But again, in the current context, imposing taxes on mandatory law is sometimes political as you know, very difficult to do even more so, you know, in developing economies.