The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) EAST ASIA AND PACIFIC | Pacific Islands | Finance, Competitiveness and Innovation Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2017 | Seq No: 11 | ARCHIVED on 14-Aug-2022 | ISR52455 | Implementing Agencies: Pacific Catastrophe Risk Insurance Company, Pacific Catastrophe Risk Insurance Foundation, Pacific Catastrophe Risk Insurance Foundation Key Dates Key Project Dates Bank Approval Date: 14-Feb-2017 Effectiveness Date: 16-Feb-2017 Planned Mid Term Review Date: 31-Oct-2019 Actual Mid-Term Review Date: 26-Jul-2019 Original Closing Date: 30-Jun-2021 Revised Closing Date: 31-Dec-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The project development objective is to improve access to post-disaster rapid response finance to Pacific Island Countries. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Establishment and Operations of PCRIC and PCRIF:(Cost $3540000.00 M) Capitalization of PCRIC:(Cost $20100000.00 M) Institutional Capacity Building on Disaster Risk Finance and Insurance Development of Disaster Risk Insurance Products and TA to PICs on DRFI products:(Cost $1540000.00 M) Monitoring and Evaluation:(Cost $250000.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Progress towards achievement of PDO and overall implementation progress continue to be rated as Moderately Satisfactory (MS), with a disbursement rate of 92 percent and remaining balance of $2million. The project was extended once in mid-2021 by 1.5 years and is now scheduled to close on December 31, 2022. While PDO indicators such as the operationalization of PCRIC and timely delivery of claims have been met, other M&E indicators such as additional products and policy holders have not yet materialized. To achieve long-term sustainability after the project closing, PCRIC will need to substantially increase its income and/or reduce its expenditures overall. 8/14/2022 Page 1 of 6 The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Moderate Moderate Institutional Capacity for Implementation and Substantial Substantial Substantial Sustainability Fiduciary Substantial Substantial Moderate Environment and Social Low Low Low Stakeholders Moderate Moderate Moderate Other -- -- -- Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Pacific Catastrophe Risk Insurance Company (PCRIC) operationalized IN01171798 ►Pacific Catastrophe Risk Insurance Company (PCRIC) operationalized (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 22-Sep-2016 03-Nov-2021 15-Jul-2022 31-Dec-2022 Albeit initially delayed, PCRIC has been operationalized with the CEO hired since late 2020, supported by Comments: a Finance and Planning Manager and Regional Coordinator, both hired in early 2022. PCRIC makes full insurnace payout withing 30 days of the occurence of a covered (insured) event IN01171800 ►PCRIC makes full insurance payout within a 30 days of the occurence of a covered (insured) event (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes 8/14/2022 Page 2 of 6 The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) Date 14-Feb-2017 03-Nov-2021 15-Jul-2022 31-Dec-2022 PCRIC made a payout to Tonga within 8 days of TC Gita making landfall in Tonga. Following TC Harold, PCRIC took 32 days to make a payout,due to Covid-19 related delays from the calculation agent and, more importantly, delays by the banks used by PCRIC to process the payment. Comments: Given that all other payments were made within 30 days and that the delay of the payout following TC Harold is minor and explained in part by the impact of Covid-19 on a key stakeholder, this indicator is still considered to be a "yes" The claims paying capacity of the PCRIC is enough to sustain a 1-in-200 year insured loss IN01171836 ►The claims paying capacity of the PCRIC is enough to sustain a 1-in-200 year insured loss (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 14-Feb-2017 03-Nov-2021 15-Jul-2022 31-Dec-2022 This indicator is comfortably achieved given PCRIC’s adequate capital position, which is sufficient to pay claims Comments: in extreme of scenarios. PCRIC is financially sustainable IN01171799 ►PCRIC total equity is projected to increase through FY24 (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 01-Apr-2021 03-Nov-2021 15-Jul-2022 31-Dec-2022 Analysis suggests that PCRIC may be able to maintain its capital with the current level of policies sold and with grant support ending in December 2022 for another season, i.e., until October 2023. However, in order to survive longer and achieve long-term sustainability without access to grant funding after the project closes at end December 2022, PCRIC will need to significantly increase its income and/or reduce its expenditure. Whilst operating expenses could potentially be reduced marginally, the main levers Comments: available to PCRIC are: (i) increasing income from investment; (ii) decreasing costs of reinsurance; and (iii) increasing premium income from policies sold, through selling to more PICs (only Cook Islands, Samoa, and Tonga currently hold PCRIC insurance policies) and new insurance products (e.g. excess rainfall and drought). Intermediate Results Indicators by Components Establishment and Operations of PCRIC IN01171839 ►Number of additional countries purchasing insurance per season (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target 8/14/2022 Page 3 of 6 The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) Value 3.00 3.00 3.00 5.00 Date 01-Apr-2021 01-Jul-2021 15-Jul-2022 30-Dec-2022 PCRIC has struggled to sell its products since the company was launched in 2016. Only Cook Islands, Samoa, and Tonga currently hold PCRIC insurance policies; whereas Vanuatu and the Republic of Marshall Islands (RMI) discontinued purchasing PCRIC policies in 2018 and 2019, respectively, and no Comments: new clients were gained since 2016. While PCRIC has recently increased its outreach efforts, especially through the hiring of the regional coordinator in January 2022, no additional countries are yet expected to purchase insurance policy from PCRIC up until the project closing in December 2022. Capitalization of PCRIC IN01171837 ►PCRIC Capitalization (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20,000,000.00 20,000,000.00 20,000,000.00 Date 14-Feb-2017 01-Jul-2021 15-Jul-2022 30-Dec-2022 Grant capitalization of US$20 million has been maintained. Comments: Development of Disaster Risk Insurance Products IN01171840 ►Number of Insurance Products Developed (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 3.00 Date 14-Feb-2017 01-Jul-2021 15-Jul-2022 30-Dec-2022 PCRIC currently offers a tropical cyclone product and an earthquake product that also covers tsunamis caused by earthquakes. An excess rainfall and drought product are expected to be offered from October 2022 and October 2023, respectively. Whilst the project has provided funding to PCRIC to develop new insurance products, PCRIC has so far not been able to develop new products due to the following Comments: reasons: a) necessary data for an excess rainfall and drought product did not exist until late 2019; and in the case of a volcano product, the science was found to be insufficiently advanced to develop a product; b) PCRIC did not have the required capacity given that it had no CEO until September 2020, nor a suitably qualified catastrophe modeler until September 2021. Monitoring and Evaluation IN01171838 ►Monitoring and evaluation conducted (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 14-Feb-2017 01-Jul-2021 15-Jul-2022 30-Dec-2022 8/14/2022 Page 4 of 6 The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) M&E consultant has been engaged to support PCRIC throughout the remaining project implementation period on progress reporting, event payout reporting and final project completion/evaluation at end Comments: December 2022. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P161533 TF-A4171 Effective USD 25.33 25.33 0.00 23.31 2.02 92% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P161533 TF-A4171 Effective 14-Feb-2017 16-Feb-2017 16-Feb-2017 30-Jun-2021 31-Dec-2022 Cumulative Disbursements 8/14/2022 Page 5 of 6 The World Bank Implementation Status & Results Report PCRAFI : Furthering Disaster Risk Finance in the Pacific (P161533) Restructuring History Level 2 Approved on 23-Jun-2021 Related Project(s) There are no related projects. 8/14/2022 Page 6 of 6