This concept has been named the “Small States Insurance Programme”.

The cost of catastrophic risks suffered by small states will be passed ultimately to the international reinsurance market through efficient and inexpensive insurance and without recourse.

Nations suffer far more than mere damage to real estate from a natural disaster, such as from hurricanes or earthquake. Government revenues fall while unbudgeted emergency expenditure needs arise, conflicting with budgeted expenditure, including any servicing of sovereign debt.

At times like these, humanitarian relief will be the main priority for any government. This insurance covers that need.
The economic consequences may be severe. In order to save lives, without suffering the worst effect of fiscal interruption, governments require immediate cash following a catastrophic disaster.

By linking insurance, not to property damage but to the measurable factors of an event (such as wind speed or Richter scale value), a nation can purchase insurance covering fiscal interruption and which provides immediate claim payments, within one week of a defined event occurring. The insurance payout is made according to “parametric triggers”, which are agreed between the reinsurers and the insured nation up-front.

The Programme offered by the CDMA ameliorates the need to make life-or-death decisions without painful economic consequences.