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Pakistan: Drought aid facility to tap parametric insurance tools

Source: Asia Insurance Review | Apr 2017

Start Network, a group of 42 national and international NGOs, is working with Pakistan’s National Disaster Management Authority (NDMA) to develop a facility which will release funds based on scientific triggers of drought, using insurance principles and parametric insurance mechanisms.
 
   The initiative is the first of its kind involving aid agencies which would be able to draw on the new source of funding to intervene before the worst effects of a drought are felt, enabling farmers and their families to protect their livestock and other assets, said Start Network in a report.
 
   Drought is a major challenge in Pakistan that is increasing in magnitude due to the impacts of climate change. 
 
   The Drought Financing Facility is being developed in partnership with GlobalAgRisk, a US-based research and development firm which develops and implements financial disaster risk management solutions that aim to build resilience to catastrophic events such as drought, floods, and earthquakes.
 
   Mr Josh Ling, Senior Microfinance Specialist for Mercy Corps, said: “The approach is different from the traditional microinsurance schemes that sell coverage to individuals one by one. This is designed with the input of NGOs and their staffs who know and understand the environment, its risks, and the most effective response mechanisms.”
 
   The next step will be to run an active pilot in Pakistan and one other country.
 
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