WFP is a leader in promoting sovereign insurance products that can offer rapid finance to affected communities in the event of major disaster. By connecting climate and disaster risk financing instruments with social protection systems at regional or local levels, these schemes can better reach and target the needs of vulnerable people in response to climate shocks.
Market-based disaster risk financing solutions, such as macro insurance policies purchased by governments to cover disaster losses, can enable faster, more cost-effective and predictable responses to climate and disaster shocks. A scale-up of climate and disaster risk finance and insurance solutions is urgently needed to enable governments and the humanitarian sector to strengthen safety nets for the most vulnerable and provide more timely financing and assistance to populations at risk. This factsheet provides a brief introduction to Sovereign Risk Finance and Insurance and how WFP is leveraging these innovative tools to better manage climate-related disaster risk.