Exclusive: Natural Disaster Fund deployed $94 million in capacity in 2024

By Henry Gale

June 27 - (The Insurer) - The Natural Disaster Fund (NDF), a governnment-backed parametric risk capacity pool, expanded its coverage to reach 42.5 million beneficiaries in 2024 as it underwrote $94 million in limit, including through its partnership with Hannover Re.

The NDF participated in 39 transactions on risk in 2024 across 73 countries, according to its annual report seen by Parametric Insurer and expected to be released later on Friday.

The fund was launched in 2018 with capital committed by the UK and German governments and shares risks with Hannover Re. Its focus is on backing parametric risk transfer arrangements to support vulnerable populations in the Global South.

It is managed by Global Parametrics, a startup initially backed by investment from the UK and German governments and then acquired by parametric specialist CelsiusPro in 2023.

[CHART 1 - Poor and vulnerable beneficiaries covered by Global Parametrics' Natural Disaster Fund]

Of the 42.5 million beneficiaries covered by NDF transactions in 2024, 36.3 million were classified as poor and vulnerable. More than half were in Africa, while 7 million were based in Asia Pacific and 9.9 million in Latin America and the Caribbean.

The NDF leveraged $61 million of private sector capacity to support its transactions, including Hannover Re's risk-sharing arrangement and other private capital.

Its annual report says the fund is seeking to scale up its activities, with more private sector support playing a role. "Through further leveraging its core capital, the NDF plans to unlock greater capital efficiency and to increase its overall capacity to absorb and distribute climate and disaster risks."

Global Parametrics has recently secured additional risk capacity through its new Lloyd's coverholder partnership with Canopius, first reported by Parametric Insurer in April, and also through its MGA outside Lloyd's.

"Combined transactions with these vehicles present even greater private sector leverage in addition to the NDF's own leverage," the report said.

[CHART 2 - The Natural Disaster Fund's portfolio in 2024]

Nearly a quarter of the NDF's portfolio is made up of multiperil policies. It underwrites perils including tropical cyclone, crop yield loss, drought and earthquake.

It made 23 payouts totalling $20.9 million during the year. These include payouts after Hurricane Beryl to support regional risk pool CCRIF SPC and individuals and micro-SMEs in Grenada.