Ethiopia gets world's first 'human disaster' insurance coverage

Ethiopia gets world's first 'human disaster' insurance coverage
March 7, 2006

ADDIS ABABA -- The United Nations food agency on Monday announced that it had signed the world's first-ever insurance cover for humanitarian emergencies in Ethiopia in the event of extreme drought, officials said.

The World Food Program (WFP) said that the contract had been awarded to AXA RE, reinsurer of the global insurance firm AXA Group to provide "$7 million in contingency funding in a pilot scheme to provide coverage in the case of an extreme drought during Ethiopia's 2006 agricultural season".

"The humanitarian emergency insurance contract might, in the future, offer us a way of insuring against these massive losses before they spell destitution for millions of families," WFP chief James Morris said in a statement.

According to the statement the insurance policy is based on rainfall data gathered from 26 weather stations across the impoverished Horn of African nation and payment will be made when the data indicates that rainfall between March and October this year is below historic averages.

"This is the first time that an insurance cover transferring risk to financial players is used for protecting people against the consequences of extreme drought," the firm's chief Hans-Peter Gerhardt said in the statement.

Ethiopia, alongside Kenya, Somalia and Djibouti, has been wracked by a severe drought that has put some 11 million people in those countries on the verge of starvation according to United Nations estimates.

Source: Middle East Times