BERLIN — The German government is looking to share the risk with the global south for climate-related catastrophes that happen there.
The Ministry of Economic Cooperation and Development, or BMZ, has committed €25 million ($27.6 million) to a new capital pool that builds on a model already established by the United Kingdom. Beginning at the start of the year, that money can be used to underwrite risk-transfer instruments that speed up recovery payouts when disasters strike or that offer a financial safeguard to agencies looking to increase their programs across the developing world.
Known as the National Disaster Fund Deutschland, it will also draw $50 million from Hannover Re, a German-based reinsurance firm. Stefan Hirche, a principal project manager at KfW Development Bank, which is managing BMZ’s commitment, said the model was an innovative attempt to transfer risks from lower-income countries to industrialized nations and the private sector.