In yet another potential collaboration, the Pacific Catastrophe Risk Insurance Company (PCRIC) held a virtual meeting with the Food and Agriculture Organization of the United Nations (FAO) to explore the feasibility of partially incorporating elements of anticipatory action (AA) to PCRIC’s insurance payouts.
This signifies the possibility of designing insurance products that provide advance payouts prior to a predicted disaster, rather than delivering post-disaster liquidity for rapid relief. Advance payments would support countries’ preparatory efforts in anticipation of the event.
These insurance products are projected to be designed to address either rapid-onset hazards, such as tropical cyclones or excessive rainfall, or slow-onset hazards, like droughts. They would be piloted in one or more countries and could partially trigger payouts based on a high probability forecast, with the remaining coverage amount being released post-disaster.
This concept perfectly complements PCRIC’s goal of launching an early-trigger drought protection product in Pacific nations, which was announced at last year’s COP27 summit. As a risk pooling entity, PCRIC already meets two of the three elements of the OCHA AA Framework (United Nations OCHA Office for the Coordination of Humanitarian Affairs), including the establishment of triggers and pre-arranged financing.
With FAO’s regional Asia-Pacific office actively engaged in anticipatory action and disaster risk financing, a collaborative partnership between PCRIC and FAO would be well received, creating a robust connection between these synergistic initiatives.
It is worth noting that these approaches are also operational in Africa through the African Risk Capacity Ltd. and in the Caribbean through the CCRIF SPC.