Counter Crisis: The State of Pre-Arranged Financing for Disasters

Author: Centre for Disaster Protection

Photo: kh.rakib via Shutterstock

While few would disagree on the importance of having plans in place before a crisis happens, why is there so little pre-arranged crisis financing, and why does a significant portion go to nations already better-equipped to handle disasters?

In our inaugural episode of Counter Crisis, our guests— Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, Lydia Poole, Associate Director, Evidence, at the Centre for Disaster Protection, and Podcast Host Jeevan Vasagar, Editor, Our Planet, illuminate the complexities and challenges surrounding global disaster planning and financing. What needs to change to ensure the most vulnerable communities receive the protection they need?

The conversation revolved around understanding disaster risk finance, and the importance of prearranged financing with specific trigger conditions, highlighting how such arrangements can mitigate the financial burden on countries grappling with disasters. The guests also explored the human cost of delayed disaster response, stressing the profound impact on people's lives, livelihoods, and overall well-being. From loss of education opportunities to economic setbacks, the consequences are far-reaching and long-lasting.

But there are critical challenges in ensuring that disaster financing reaches the most vulnerable communities, with systemic barriers highlighted during the discussion, together with the need for enhanced coordination among stakeholders to address this issue effectively.

The podcast also addresses concerns surrounding premium financing, acknowledging the evolving discourse and the need for clarity on its objectives and conditions. The guests discussed the importance of striking a balance between supporting governments and ensuring long-term financial protection.

Lydia Poole noted that there have already been a number of iterations of changes in thinking around premium financing globally and changes in comfort levels with providing donor funding.

“Development actors who were keen supporters of disaster risk financing have realised in its implementation that often the demand wasn't there from governments. And so if they want to stand up and create viable instruments and for governments to buy those policies, they're going to have to help them,” she said. 

Ekhosuehi Iyahen also highlighted the evolving role of the insurance industry in disaster risk finance, emphasising the importance of focusing on people and their needs. She called for greater innovation and collaboration to tailor solutions that prioritise the protection and agency of individuals and communities:

“It is also about the money getting to the people and the affected communities. So that is another part of the disaster response conversation. It is the financing, but it's also the delivery. And I think that right now, there are processes in terms of trying to get those resources to those communities, but there are obviously also challenges. And I think that this is the difficulty that we face in this space, is that there is work that we can do and opportunities on the financing, but ultimately, it is also about investing in the structures on the ground to again reach people in order for us to have the kind of impact that we need to have.”

Both guests emphasised the growing urgency of addressing climate-related disasters, highlighting the need for concerted global efforts and political courage. They focused on the importance of disaster risk finance as part of a broader toolkit to tackle the escalating impacts of climate change.

As the world grapples with increasingly frequent and severe disasters, the insights shared in this podcast underscore the imperative of proactive and coordinated action in disaster risk finance. 

From reimagining financing mechanisms to prioritising the needs of vulnerable communities, there's a clear call to action for policymakers, stakeholders, and the international community to step up efforts in building resilience and protecting lives and livelihoods worldwide.

Click here to listen to the episode in full 

Click here to download the report: The State of Pre-Arranged Financing for Disasters

To discuss any of the aspects raised in this article, or for further information about the work of the Centre, please get in touch.