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Red Cross Launches Historic Multi-Disaster Insurance Payout in Response to 2024 Climate Crisis
GENEVA (Reuters) – The cascading impacts of floods and landslides experienced globally in 2024 have led to the first multi-disaster insurance payout by the Red Cross, highlighting the urgent need for innovative financial mechanisms within the humanitarian sector.
The International Federation of the Red Cross and Red Crescent Societies (IFRC) has indicated that indemnity insurance funds, which are activated when the cumulative costs of disasters exceed a designated threshold, serve as crucial support for relief efforts that are increasingly challenged by climate change-related crises.
This groundbreaking insurance policy, developed in collaboration with insurance broker Aon, was activated in mid-September following the catastrophic Asian Typhoon Yagi. The storm contributed to total disaster expenditures surpassing 33 million Swiss francs (approximately $37.84 million), prompting a disbursement of over 7 million Swiss francs to aid recovery efforts.
The funds have already provided assistance to approximately 1.5 million individuals affected by disasters in some of the world’s poorest nations, including victims of flooding in Nigeria and those displaced by a landslide in Nepal.
Florent Del Pinto, head of the Disaster Response Emergency Fund, underscored the importance of this financial support, stating, “This provides contingency funding when you have exceptional needs. We would not have been able to respond to those disasters we are responding to today without this.” He expressed concern over the unprecedented scale of this year’s crises, which have triggered payouts at a higher-than-expected threshold.
Looking ahead, the IFRC is actively working to secure close to 100 million Swiss francs for its 2025 disaster response budget, reaching out to potential donors for contributions towards the insurance premium as well.
Del Pinto acknowledged the skepticism some donors have had regarding the effectiveness and ethical considerations of disaster insurance, stating that this year’s payout may help dispel doubts. He also shared that several other humanitarian organizations have expressed interest in establishing similar insurance funds to bolster their own disaster response capabilities.
“We are in this situation in which humanitarian needs are growing almost exponentially while funding is stable, so we need to explore innovative financing to address the funding gap and respond to human suffering,” he added, emphasizing the pressing need for forward-thinking solutions in the field of humanitarian aid.
($1 = 0.8722 Swiss francs)
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