The SEADRIF Insurance Company and the Food and Agriculture Organization of the United Nations (FAO) have launched an anticipatory drought insurance pilot in Lao People’s Democratic Republic (Lao PDR), the first time a Southeast Asian government has secured parametric insurance specifically designed to deploy pre-arranged finance ahead of drought impacts.
According to SEADRIF, the insurance pilot provides the Ministry of Finance of Lao PDR with access to payouts triggered by early warning data signaling elevated drought risk, before drought majorly affects farming households and rural communities.
SEADRIF explained that financing is activated when the Combined Drought Index, which is monitored by the Department of Meteorology and Hydrology and combining observation and forecast data, crosses a defined threshold.
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