A proposed Commonwealth-wide mutual reinsurance vehicle aimed at speeding disaster funding for climate-vulnerable countries has won backing from Bermudian-based Conduit Re.

The Sustainable Markets Initiative said yesterday that it had completed a feasibility study for “Commonwealth Mutual”, a proposed sovereign-owned risk pool that would allow participating countries to combine their exposure to hurricanes, floods, droughts, earthquakes and other extreme events.

The initiative was presented at the Commonwealth Heads of Government Meeting in Antigua and Barbuda, where David Burt, the Premier and Minister of Finance, took part in a discussion on mutualising disaster risk.

By spreading risk across participating countries, the initiative said, the mutual could cut down on volatility and offer greater protection at a lower cost than many countries could get on their own.

It would also aim to provide fast liquidity after disasters, limiting the economic shock and reducing reliance on post-disaster aid and emergency loans.

However, the proposal is still at an early stage. The completed study examined whether there is enough insurance-market capacity and technical expertise to support the vehicle. The SMI said it was now working with key Commonwealth countries on a full proposal.

Neil Eckert, the chief executive of Conduit Re, said: “The SMI feasibility study has demonstrated not only that Commonwealth Mutual is achievable, but that the private sector — including brokers, insurers, regulators and capacity providers — is ready and willing to play its part in moving towards closing the protection gap across the Commonwealth,” he said.

Mr Eckert added that the Commonwealth’s scale and diversity could allow the mutual to offer “significant limits at pricing that would be unachievable by any nation on its own”.

Jennifer Jordan-Saifi, CEO of the Sustainable Markets Initiative, said: “Commonwealth Mutual demonstrates a rare opportunity to turn shared climate risk into collective strength.

“We can deliver faster, more reliable resilience for Commonwealth nations, reduce reliance on aid and unlock scalable, sustainable growth for the global insurance industry.”

The SMI said Commonwealth Mutual would be designed to complement regional risk pools that already exist, including the Caribbean Catastrophe Risk Insurance Facility, African Risk Capacity and the Pacific Catastrophe Risk Insurance Company.

Bermuda is a member of CCRIF, which provides parametric insurance to governments and other entities in the region. Rather than paying after a claims assessment, parametric insurance releases funds when an agreed trigger, like a wind speed or rainfall, is reached.

CCRIF paid more than $122 million during the 2024-25 policy year, its most impactful year since inception, according to the facility. The payouts included disaster funding after Hurricane Beryl.

The announcement also comes as Bermuda looks to expand its role in parametric risk transfer. The Bermuda Monetary Authority said in September that it aimed to introduce a new class of insurer for fully collateralised parametric business before the end of this year.

The SMI was founded in 2020 by King Charles III, when he was Prince of Wales, to encourage private-sector action on sustainable development and climate change.