The International Federation of Red Cross and Red Crescent Societies’ Disaster Response Emergency Fund (IFRC-DREF) has made history by triggering its inaugural insurance payout. This significant event followed the surpassing of its deductible threshold due to overwhelming disaster relief demands. The IFRC-DREF has long been a crucial source of immediate funding for National Red Cross and Red Crescent Societies, especially in response to smaller-scale disasters that often go unnoticed on the global stage. However, in the past, the fund faced the risk of depletion before the year’s end. To address this, the IFRC entered into an indemnity insurance policy agreement with Aon and reinsurers.
This insurance policy offers a coverage of up to $16.92m (CHF15m) when the fund’s annual natural disaster relief spending exceeds $37.22m (CHF33m), with an annual premium of $3.38m (CHF3m). The trigger for this year’s payout was a spate of natural disasters, most notably Super Typhoon Yagi. With nearly 100 IFRC-DREF allocations in 2024 and natural hazard-related spending crossing the deductible mark, the insurance payout will now support additional disaster relief efforts for the remainder of the year, up to the policy limit.
Looking forward, the IFRC has ambitious plans. It aims to broaden the scope of its insurance policy to encompass other emergency types, such as epidemics and anticipatory actions, in addition to natural disasters. This expansion could potentially revolutionize the way the organization manages and funds emergency responses, providing a more comprehensive safety net for communities affected by a wide range of crises. The insurance industry and disaster relief sector alike will be closely watching as these developments unfold.
Related topics
