1 INTERNATIONAL NETWORK ON FINANCIAL MANAGEMENT OF LARGE-SCALE CATASTROPHES Global Conference on Insurance and Reinsurance for Natural Catastrophe Risk Istanbul 8-9 December Flore- Anne Messy OECD

2 Creation of a new International Network on Financial Management of Large-Scale Catastrophes Series of increasing large-scale natural and man made disasters OECD recent work on man-made and natural large-scale disasters: Two key publications in 2005: –Terrorism risk insurance in OECD countries (ministerial mandate) –Catastrophic risks and insurance (proceedings of the conference) Two conferences on large-scale catastrophes including emerging economies –in Paris in November 2004 –in Kuala Lumpur in November 2005 Launching of the network in 2005 under the aegis of the OECD Insurance and Private Pension Committee and the Committee for Financial Markets

3 A.International Network on Financial Management of Large-Scale Catastrophes: A.International Network on Financial Management of Large-Scale Catastrophes: Objectives Provide a Forum to exchange information and experience on the financial management of large-scale catastrophes and related operational issues. Analyse related tools and schemes implemented in OECD and non OECD countries; consider the scope for improved or new tools, products, schemes, strategies, and partnerships, to respond to emerging risks and challenges, in particular in relation to the threat of large- scale natural catastrophes and modern terrorist attacks. Develop policy options aimed at improving catastrophe mitigation and compensation strategies.

4 B. International Network on the Financial Management of Large-Scale Catastrophes: W ork Plan 1. Clarifying new and emerging challenges: Analysis of new and emerging threats and vulnerabilities (including those entailed by the development of interdependent critical networks or of the current and potential evolution of the liability framework); Analysis of the past and potential impact of disasters on insurance, reinsurance and financial markets and of possible financial systemic risks in connection with natural disasters and terrorist acts.

5 B. International Network on the Financial Management of Large-Scale Catastrophes: W ork Plan (cont.) 2.Improving risk assessment, anticipation, prevention, and mitigation: Developments in risk modelling; linking risk assessment with risk- transfer instruments (rates, portfolio management, scope of risk transfer); Options to enhance disaster risk awareness and the need for prevention and adequate financial coverage (insurance in particular) both among population and corporate entities; Options for private and public incentives to prevention and mitigation (e.g, regarding land use, building codes, warning systems etc.); integrating mitigation with risk-transfer instruments;

6 B. International Network on the Financial Management of Large-Scale Catastrophes: Work Plan (cont.) 3. Enhancing crisis management and compensation capacity Catastrophe contingency planning, incl. for the financial market infrastructures; improving responsiveness to “out of the box” scenarios; Crisis management and loss mitigation; incl. sharing of national post- disaster reviews of performance; Organisation of financial compensation; Evolution of ARTs – scope for new products/possible changes in their legal/accounting/fiscal environment? Market and regulatory evolution regarding catastrophic risk reserving by insurance and reinsurance companies.

7 C.International Network on the Financial Management of Large-Scale Catastrophes: First Outputs First policy guidance report to be released end of 2006 Conference on the financial management of large- scale catastrophes to be organised in Asia end of 2006

8 CONTACT INFORMATION OECD Website : Flore-Anne Messy OECD Financial Affairs Division Tel:

9 THANK YOU FOR YOUR ATTENTION