The International Federation of the Red Cross and Red Crescent (IFRC) has recently launched a new financial risk transfer mechanism for disaster response. This collaboration is in partnership with the Centre for Disaster Protection and international donors, such as the UK FCDO, the British Red Cross, and the Danish Red Cross.
The Disaster Response Emergency Fund (DREF) is an insurance mechanism triggered whenever the DREF’s allocated funding for natural hazards reaches 33 million Swiss Francs. This will replenish DREF’s reserves with up to 20 million Swiss Francs and ensure that additional funds are available and ready to aid vulnerable communities, even during increased demand.
The insurance tool enhances DREF’s capacity to respond more flexibly and effectively, potentially reaching an additional 6 million vulnerable people each year. Furthermore, it also transfers risk from strained public balance sheets to the private sector and showcases the role of insurance in building society’s resilience against climate-related risks.
Click here to read the Press Release from the IFRC