International catastrophe risk modeling firm AIR Worldwide has been selected by the World Bank to model the Pandemic Emergency Financing Facility (PEF), and has also announced substantial enhancements to its Global Pandemic Model.
After announcing the establishment of the PEF, the world’s first-ever insurance market for pandemic risks, earlier this year, the World Bank has now selected one of the world’s leading catastrophe risk modellers, AIR Worldwide to model the innovative facility.
“The analytical structure and modeling are the bedrock of risk-transfer programs like the PEF. We’re confident that AIR Worldwide’s analytical and execution capabilities can help ensure that funds mobilized by the PEF are able to help prevent rare, high-severity outbreaks from becoming more deadly and costly pandemics,” said Priya Basu, Manager, Development Finance at the World Bank.
The PEF is designed to be able to rapidly disperse funds to countries and qualifying international response agencies following a pandemic outbreak, utilising an insurance window that will be backed by reinsurance and insurance-linked securities (ILS) structures and capacity.
AIR Worldwide is now collaborating with the World Bank on the expected launch of the PEF, a move that sees the firm provide valuable modeling capabilities that will assist with the development of the scheme and improve its risk transfer and risk management abilities.
“Modeling plays a crucial role in developing a facility such as the PEF. Emerging infectious diseases pose some of the biggest threats to the life and health of people around the globe, and AIR models can help organisations anticipate the drivers of mortality and morbidity risk to facilitate optimal risk management, risk transfer, and risk mitigation decisions to help them better prepare financially and, more importantly, on a humanitarian level,” said Doug Fullam, Associate of the Society of Actuaries, Senior Manager of Life and Health modeling at AIR Worldwide.
Along with the announced collaboration with the World Bank, the catastrophe modeling firm also revealed some enhancements to its Global Pandemic Model, expanding the model to include outbreaks of a further six diseases.
The expansion now means that the model “explicitly accounts for nine pathogens,” which includes bacterial and viral diseases on top of the previously modelled influenza, coronaviruses, and filoviruses, explains AIR Worldwide.
Expanding on the significant enhancemnents to its Global Pandemic Model, the firm explains that this includes two pathogens from the Bunyaviridae viral family (Rift Valley fever virus (RVFV) and Crimean-Congo hemorrhagic fever virus (CCHFV)), Lassa fever that comes from the Arenaviridae viral family, bacterial-pathogens-associated cholera (Vibrio cholera), plague (Yersinia pestis), and also meningococcal meningitis (Neisseria meningitidis).
Furthermore, AIR Worldwide explains that all infectious disease outbreaks within its model can originate anywhere in the world, and as a result the firm models the impact to 24,000 municipalities across all regions of the globe.
“Large-scale infectious disease pandemics can cause millions of deaths and billions-or-even-trillions-of dollars in economic and insured losses. The possible frequency and scale of these perils are shifting as global connectivity grows, animal habitats alter, medical advances continue, the population ages, and the climate changes. It’s important to assess the potential risk to today’s life and health portfolios,” said Fullam.
The recent Ebola outbreak is a reminder of the devastation and costs to families and entire economies pandemics pose, and with the overall loss of life and the financial burden potential extremely high it’s important that adequate risk transfer exists to respond to an event in a timely manner, something that has been lacking.
The PEF is a step in the right direction and it’s aim at providing fast payouts and rapid disaster response once an outbreak occurs, will likely prove invaluable to the countries and regions that will require assistance.
Tools like AIR Worldwide’s Global Pandemic Model are vital in improving the understanding of pandemic risks across the globe and the potential impact this can have on both global and local economies, ultimately assisting with more adequate pricing of the risks, which in turn should facilitate more efficient and effective risk transfer for pandemics.
AIR Worldwide notes that its Global Pandemic Model is available in the CATRADER® Version 18 catastrophe risk management software.