At the 2015 Forum Economic Ministers Meeting (FEMM) in Cook Islands, the Finance Ministers of the Pacific Island Countries (PICs) agreed to establish the PCRAFI Facility to provide disaster and climate risk insurance. In addition, it was agreed to domicile the Facility as an independent legal entity in the Cook Islands and for the Facility to be effective by August 2016. This is a major achievement in the development of the PCRAFI insurance program that demonstrates the willingness and commitment of the PICs to establish their own management entity to ensure the sustainability and further development of the PCRAFI insurance program. The PCRAFI Facility will provide the PICs with climate and disaster related insurance with the aim to increase the financial resilience of PICs against natural disasters. By providing parametric insurance solutions to the PICs the PCRAFI Facility will help build their financial response capacity to meet post-disaster funding needs without compromising their fiscal balances and development. It will also provide the PICs with greater ownership of disaster and climate risk financing at the regional level, giving them control and influence over the design of future disaster and climatic risk solutions. The Facility will also be able build reserves, which will allow it to retain some of the risk and transfer the remainder to the reinsurance market when it is the most cost-effective, leading to further insurance premium reduction.

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