This note aims to build understanding ofthe existing disaster risk financing and insurance (DRFI)tools in use in The Marshall Islands and to identify gapswhere potential engagement could further develop financialresilience. The likelihood that a hazardous event will havea significant impact on the Marshall Islands has risen withthe increasing levels of population and assets in the urbanareas of Majuro and Ebeye. The low-lying atolls are at riskof damage to both assets and people as a result of stormsurges and tsunamis. The Marshall Islands is expected toincur, on average over the long term, annual losses of US$3million due to earthquakes and tropical cyclones. In thenext 50 years, the Marshall Islands has a 50 percent chanceof experiencing a loss exceeding US$53 million. Thegovernment takes an ex-ante approach to financing the costof disasters, but the resources available are limited. TheMarshall Islands has a maximum amount of US$15.6 millionpotentially available in ex-ante instruments to facilitatedisaster response. The government s post-disaster budgetexecution process relies on a variety of financial tools,but the size of the economy limits access to immediatepost-disaster cash resources. A number of options forimproving disaster risk financing and insurance arepresented here for consideration: (a) develop an integrateddisaster risk financing and insurance strategy; (b) assessthe domestic insurance market for both public and privateassets to establish what products are currently offered andto determine their level of uptake; (c) carry out aquantitative analysis to determine whether contingent creditcould be an effective tool to access additional liquiditypost-disaster; and (d) investigate the possibility ofestablishing policies for financial assistance to disastervictims in remote communities.
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