Global Floods and Landslides Trigger First Multi-Disaster Insurance Pay-Out

By Emma Farge

GENEVA (Reuters) – The world faced unprecedented floods and landslides in 2024, prompting the aid sector's inaugural multi-disaster insurance pay-out, as reported by the Red Cross. This event highlights the growing scale of humanitarian issues and the urgent demand for innovative financing solutions.

Red Cross Response

The International Federation of the Red Cross and Red Crescent Societies (IFRC) announced that indemnity insurance funds, which become active when repeated disasters surpass a certain cost threshold, can safeguard relief budgets that are increasingly burdened by frequent climate-induced crises.

In collaboration with insurance broker Aon (NYSE:AON), the IFRC launched this pioneering policy for the aid sector, triggered by the devastating Asian Typhoon Yagi in mid-September. The disaster pushed total spending beyond 33 million Swiss francs ($37.84 million), leading to over 7 million Swiss francs being disbursed.

The funds have so far aided 1.5 million disaster victims across impoverished nations, including those affected by floods in Nigeria and a landslide in Nepal.

Funding Needs

"This provides contingency funding for exceptional needs. Without this, we would struggle to respond to current disasters," stated Florent Del Pinto, head of the Disaster Response Emergency Fund, in an interview with Reuters. "What's concerning is that this year’s needs have reached an unprecedented level, triggering our pay-out."

The organisation aims to secure close to 100 million Swiss francs for its 2025 disaster response budget in Geneva and will request donors to contribute towards the insurance premium as well.

Del Pinto expressed hope that the current pay-out will alleviate past skepticism from donors regarding the effectiveness and ethics of disaster insurance products. He added that the maximum pay-out may play a larger role in future humanitarian financing as several other aid agencies have shown interest in establishing similar funds.

"We face a situation where humanitarian needs are exponentially increasing while funding remains stable, so we must pursue innovative financing solutions to bridge this gap and alleviate human suffering," he said.

($1 = 0.8722 Swiss francs)