SEADRIF Insurance Company and the Food and Agriculture Organization of the United Nations (FAO) have launched an anticipatory drought insurance pilot in the Lao People's Democratic Republic (Lao PDR). This marks the first time a Southeast Asian government has secured pre-arranged financing designed to activate ahead of drought impacts.
The pilot provides the Lao Ministry of Finance with access to payouts triggered by early warning data indicating elevated drought risk, before conditions severely affect farming households and rural communities. Payouts are distributed when the Combined Drought Index, which is monitored by the country’s Department of Meteorology and Hydrology, reaches a certain threshold.
Under the pilot, payouts will fund government-led anticipatory actions, including early warning messages, community training on drought-resistant farming techniques, and improved water and irrigation management.
Drought is the single largest disaster risk in Lao PDR, with around 1.2m people exposed annually and average annual losses estimated at $672m, equivalent to about 3.5% of gross domestic product (GDP). The initiative comes as forecasts point to a possible return of El Niño conditions in 2026 to 2027.