PROJECT: Disaster Risk Insurance For Vulnerable Communities In Pakistan
Project Reference: TAAS-0032
The Government of Pakistan responds to natural disasters (increasing floods, earthquakes, cyclones and droughts) on case to case basis, relying on domestic budgets, including diversion of resources from other projects, and on extensive financing from international donors. While ex-postdisaster funding from donors and multilateral financial institutions can be an important part of government’s catastrophe risk management strategy, over-reliance on this approach has major limitations in terms of efficiency, effectiveness, and sufficiency. By ensuring that sufficient liquidity exists in the immediate aftermath of a disaster, modern funding approaches such as micro insurance of vulnerable communities are being considered to help to speed recovery and ensure that scarce government funds are well used.
The National Disaster Management Authority (NDMA) had charted a plan which has political backing to take it forward. The plan included designing a Disaster Risk Insurance scheme such that it provides low-income households easily accessible and affordable insurance. This could be at any of the 5 levels: i) Covering demise of the bread-earner, ii) Food security, iii) Shelter, iv) Livestock, and v) Crop.
The National Disaster Management Authority (NDMA) and Government of Pakistan requested CDKN to support its cause to develop a risk transfer mechanism to protect lower income population groups from extreme events that are expected to increase in frequency due to climate change impacts. They requested two components:
- the design of the fund and preparation of any legal documentation required; and
- the formulation of an Insurance Strategy for Disaster-prone Vulnerable Communities.
CDKN approached the request in two phases. As part of Phase 1, five options of a potential fund design were prepared for the NDMA to choose from. Under phase 2, CDKN supported the NDMA in designing an insurance strategy by undertaking a 6 month Demand Study in 5 districts of Pakistan. The detailed insurance strategy has helped the NDMA in moving towards consensus on the Fund designs proposed under Phase 1.
RECENT UPDATE and RESOURCES:
Read CDKN Project Manager Kashmala Kakakhel’s blog from the workshop in Islamabad which launched this project.
CDKN Funding: £577,665.00