Foreign aid catastrophe bond proposed

The London Market Group has published a white paper that proposes the creation of a foreign aid catastrophe bond by using the impending U.K. insurance-linked securities regime, reported Artemis.bm. "The idea behind the [bond] is a joint initiative between the Government and LMG to provide a cost-effective response to catastrophes currently supported by the U.K. foreign aid budget," said Malcolm Newman, head of an LMG project.

Under the initiative, an insurance policy for certain risks would be issued to protect nations that currently receive development aid from U.K.'s Department for International Development.

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