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UK Disaster Protection Centre: Humanitarian Insurance: Weighing the Options

Through the previous blogs in this series, we have started to unpick the role for risk transfer in a humanitarian context, and raised some of the ethical, practical, and principle-based reasons why humanitarian actors might think twice before using risk transfer tools like insurance [1]. The obvious next question for humanitarian actors and donors is simple: “when is risk transfer a good option?”.

Whether risk transfer is a good option depends on many factors. And the exercise of weighing the relative benefits of risk transfer and balancing this against its cost can’t be done simply by turning a handle on an excel spreadsheet.

This question takes a human touch. At its core, weighing and balancing the option of risk transfer often relies on a technical analysis of the costs and benefits of risk transfer in relation to a defined value statement. But any decision must also reflect strategic objectives, reviews of practical, logistical, and legal limitations, and a critical evaluation of the reasons why a product might fail, and the failsafe mechanisms that can be used to mitigate this risk.

To help guide decision-making, this blog poses three questions that aim to help humanitarian actors and donors to triage proposals for using risk transfer:

  1. Risk transfer for what future costs?

  2. How does risk transfer compare to other options?.

  3. Are we there yet?


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