Considerations for establishing PPIPs in emerging markets

The World Bank Group policy paper (2025) Mobilizing Public-Private Solutions to Manage the Financial Impacts of Natural Hazards in Emerging Markets and Developing Economies (EMDEs) outlines a number of considerations in establishing PPIPs. These include:

• PPIPs should be seen as part of a comprehensive, risk-layered Disaster Risk Finance and Insurance (DRFI) strategy. Insurance and PPIPs should be seen as one instrument within a broader menu of options available to governments. Different instruments should be combined to protect against events of different frequency and severity.
• Long-term objectives should be considered alongside immediate needs. It is important to consider a phased and prioritized approach to help governments find practical solutions to address urgent priorities (saving lives and livelihoods) while building the foundations for more sophisticated solutions in the long run, especially in low-income countries where the financial system is weak and the insurance sector is underdeveloped.
• PPIPs require strong political commitment and ownership. Even in the most challenging of contexts, a strong champion within the government is essential to ensure continuity and to carry through reforms.
• PPIPs can present an opportunity to embed risk reduction investment into insurance programs, by either directly investing or promoting collaboration across public and private sectors to ensure that insurance enables and encourages improved risk management standards.

These collaborations can take several forms depending on (i) the policy objectives of the government (who they want to protect and for what), (ii) the level of development of the insurance market and more broadly the level of development of the domestic financial sector, as well as (iii) the financial and institutional capacity of the government to prepare for and respond to disasters.

While governments often focus on protecting vulnerable populations through adaptive social protection programs funded by public resources, PPIPs enable, for example, integrating market based instruments like sovereign parametric insurance backed by international reinsurance, with support from development partners. Additionally, in the infrastructure field, PPIPs can be a valuable tool to help minimize disruptions to essential services, particularly for vulnerable populations.