Disaster Risk Financing and Insurance

January 13, 2016

Natural disasters such as tropical storms, floods, earthquakes, and droughts are increasing in frequency and severity due to climate change, and can have a devastating effect on homes, agriculture, infrastructure, and communities. Over the last 10 years, the cost of disasters reached an average of $165 billion per year, and far exceeds the official development assistance amount. Developing countries feel the impacts of disasters most severely, and the costs of disaster response and rebuilding drain already limited resources. These costs, however, can be mitigated through financial planning. Countries around the globe have implemented regional strategies to protect themselves financially. Pacific Island nations have worked together to assess risk and utilize insurance contracts. In Colombia, the government has insured $38 billion in infrastructure. Countries in Africa are increasingly investing in drought protection for farmers. Similar programs across the globe are helping to safeguard livelihoods and restore access to health care, education, and food supply more quickly. Planning in advance allows governments to ensure that the money goes where it’s needed most. Ultimately, financial protection strategies protect lives as well as a country’s long-term stability.

This animated video gives an overview of the many impacts of natural disasters on lives, communities, and countries. It also illustrates the ways financial planning can help build a foundation for growth and reduce disaster’s costs, budgets drains, and devastation. It also highlights solutions that have been implemented in several regions with support of the Disaster Risk Financing and Insurance (DRFI) Program, a partnership of the World Bank Group and the Global Facility for Disaster reduction and Recovery (GFDRR).