The World Bank’s Pandemic Emergency Financing Facility will be operational this month after two years of preparation, with heavy involvement from the insurance industry, including Munich Re and Swiss Re.

The facility is designed to help developing countries fight deadly disease epidemics and pandemics, providing more than $US500 million ($650 million) to cover them against the risk of outbreaks over the next five years.

It combines funding from the (re)insurance market with proceeds from World Bank-issued catastrophe bonds.

It marks the first time the World Bank has used its bonds to combat infectious diseases and the first time pandemic risk will be transferred to the market to cover low-income countries.

The insurance component was developed in co-operation with Munich Re and Swiss Re, and the premiums are to be funded by Japan and Germany.

“This creates an entirely new market for pandemic risk insurance,” World Bank Group President Jim Yong Kim said.

“We are leveraging our capital market expertise, our deep understanding of the health sector, our experience overcoming development challenges and our strong relationships with donors and the insurance industry to serve the world’s poorest people.”