Disaster Risk Financing & Insurance

 
The GFDRR Disaster Risk Financing and Insurance (DRFI) Program assists developing countries in increasing their financial resilience to natural disasters. The DRFI Program partners with developing countries in a variety of ways; from establishing natural disaster micro-insurance programs to intermediating between governments and international financial markets, the DRFI Program seeks innovative ways to mitigate the financial impacts of natural disasters on individuals, small- and medium-enterprises, agricultural sector participants, and governments.  

                               
                                *Note: The Partnership Learning Series (PLS) is a course series within the GFDRR Learning section.

To learn more about the DRFI Program, please visit our Program Pages.

DRFI Program Pages:

About the DRFI Program
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Publications *Recently Updated*

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Latest News

 

World Bank releases US$500 million to assist Philippine Government address impacts of devastating storm

January 17, 2012 – In late December 2011, the Philippine Government drew down the full amount of its US$500 million Development Policy Loan with Catastrophe Deferred Drawdown Option (Cat DDO) to finance expenses related to the government’s recovery and reconstruction efforts in the wake of tropical storm Washi, locally known as Sendong, which devastated parts of the country during December 17-18, 2011. Tropical storm Washi affected an estimated 720,900 individuals, with 4,620 injured and the death toll reaching almost 1,260 persons. The National Disaster Risk Reduction and Management Council has estimated the damage to infrastructure, agriculture, and school buildings at over Php1.3 billion.

The Philippine Government secured its Cat DDO in September 2011 to complement its efforts to increase the country's overall resilience to disasters through pro-active disaster risk management (DRM). To this end, GFDRR is providing technical assistance to support implementation of Republic Act 10121 or the Philippine Disaster Risk Reduction and Management Act of 2010, as well as its Strategic National Action Plan for Disaster Risk Reduction, which serves as the road map in the coming ten years to improve disaster risk management.

The Cat DDO is one of the innovative disaster risk financing and insurance (DRFI) tools available from the World Bank to increase countries' financial resilience to natural disasters as part of their overall DRM agenda. It gives a government immediate access to funds after a major natural disaster, a time when available funds are often not adequate to meet the needs for reconstruction and recovery. The Cat DDO for the Philippines is the first of its kind in the East Asia and Pacific region. Six other countries in the Latin America and Caribbean region have Cat DDOs. Learn more about the World Bank Cat DDO by reading the product note or reading about Costa Rica or Guatemala's experiences with the Cat DDO.

For more information, please see the World Bank press release.

ASEAN, GFDRR, World Bank, and UNISDR advance regional cooperation on disaster risk financing and insurance

November 10, 2011 – The ASEAN Disaster Risk Financing and Insurance Forum closed today in Jakarta, Indonesia. The ASEAN Secretariat hosted the DRFI Forum in partnership with the GFDRR DRFI Team, the World Bank East Asia and Pacific Disaster Risk Management Team, and the UNISDR. The Forum brought together delegates from the Ministries of Finance, Insurance Regulators, and Disaster Risk Management Agencies of the ten ASEAN Member States.

For three days, attendees discussed the current and future role of disaster risk financing and insurance in the context of disaster risk management and climate change adaptation in the ASEAN region. ASEAN Member States agreed that DRFI has an imperative role to play in increasing the region’s financial and overall resilience to natural disasters; they concluded the Forum by drafting a regional road map for DRFI to be presented at the next ASEAN Council. For the full press release, click here. More information on the event is also available on the ASEAN DRR Portal.

Read the GFDRR/World Bank background report, Advancing Disaster Risk Financing and Insurance in ASEAN Countries: Framework and Options for Implementation. Click here for the draft main body and annexes, and click here for the draft appendices.

GFDRR-supported India modified National Agricultural Insurance Scheme completes successful pilot season

October 13, 2011 – In 2005, at the request of Government of India (GoI), the World Bank began working in close collaboration with the GoI and the public crop insurer Agriculture Insurance Company of India to strengthen the performance of the National Agricultural Insurance Scheme (NAIS), the main crop insurance program in India. In September 2010, the GoI approved a plan to move from the NAIS into a modified NAIS (mNAIS) under an actuarial regime on a pilot basis.

The modifications made to NAIS are beginning to show results: for the 2010-2011 spring (Rabi) harvest, more than 300,000 farmers benefited from the modified scheme. The loss ratio (claim/premium) for the pilot is expected to be around 50 percent, which augurs well for the financial sustainability of the scheme. Historically, the loss ratio has always been higher than 100 percent.

The number of participating farmers is anticipated to increase to 400,000 for the 2011 autumn (Kharif) harvest, with a total sum insured in excess of one billion rupees. In the longer term, it is expected that the mNAIS will increase benefits for millions of farmer clients covered under the original scheme. In addition, its better product design and delivery can be expected to lead to far greater coverage of the insurance program. In early 2011, the mNAIS was recognized for its innovative approach to contributing to farmer risk mitigation through an Innovation Fund award; read the news story here.

For more information on the project, read the full World Bank report, Enhancing Crop Insurance in India, or review the Summary of Policy Suggestions. This two-page note also provides a case study on the project.