The World Bank on Saturday announced the launch of a $500 million insurance fund, which would be disbursed to poor countries in case of deadly pandemics. The fund called Pandemic Emergency Financing Facility (PEF) is the first-ever insurance market for pandemic risk, the World Bank said in an official statement.

The announcement came a week ahead of May 26-27 Summit of Group of Seven Leaders in Ise-Shima, Japan. G7 leaders earlier urged the World Bank Group to develop the initiative during their May 2015 summit in Schloss-Elmau, Germany.

"Japan, which holds the G7 Presidency, committed the first $50 million in funding toward the new initiative," the World Bank said.

It further said that the new facility would accelerate both global and national responses to future outbreaks with pandemic potential. The fund has been set up by the World Bank in collaboration with World Health Organisation and the private sector.

The insurance window according to the World Bank will provide coverage of up to $500 million for an initial period of three years for outbreaks of infectious diseases most likely to cause major epidemics.

"Pandemics pose some of the biggest threats in the world to people's lives and to economies, and for the first time we will have a system that can move funding and teams of experts to the sites of outbreaks before they spin out of control," Jim Yong Kim, president of the World Bank Group said.

The concern for establishment of a quick funding mechanism in case of health emergencies according to the global agency arose after there was acute shortage of finances during the Ebola outbreak.

"This facility addresses a long, collective failure in dealing with pandemics. The Ebola crisis in Guinea, Liberia and Sierra Leone taught all of us that we must be much more vigilant to outbreaks and respond immediately to save lives and also to protect economic growth," Jim Yong Kim added.

Over the past two years, pandemic threats such as Ebola crisis in West Africa have been estimated to cost $2.8 billion loss to the economies of Guinea, Liberia and Sierra Leone.

The expert panels constituted last year to determine the economic impact of disease outbreaks in the wake of Ebola crisis concluded that the world must urgently step up its capacity for an upfront response to outbreaks before they become severe and costly pandemic.