Pakistan drought triggers humanitarian insurance payout

By Henry Gale

June 23 - (The Insurer) - Charity Tearfund received an insurance payout worth more than 260,000 pounds ($350,000) after its parametric coverage was triggered by drought conditions in Pakistan, it said on Monday.

This is Tearfund's second insurance payout after a drought in Malawi triggered a $100,000 claim earlier this year.

Under the policy designed by Global Parametrics, part of CelsiusPro Group, claims payments are made based on an index that measures the availability of water for crops. In this case, a severe drought triggered the highest possible payout for the areas of Pakistan Tearfund and its partners are operating in to help communities adapt to climate change.

Tearfund plans to use the payout to support around 18,900 people in 3,000 families affected by the drought, according to Jonathan Johnson, its country director for Pakistan.

The charity will provide them with "food relief, clean water for drinking, hygiene kits, suitable seeds for planting when rains eventually come and veterinary support to ensure livestock and livelihoods are protected through this difficult period of drought," he said.

"Traditional models of aid can be too slow to prevent the worst of a hunger crisis. This new way of pre-emptively financing relief efforts protects small-scale farming communities from drought induced hunger and secures the progress Tearfund has made building resilience to the climate crisis."

The insurance policy is backed by capacity from the government-funded Natural Disaster Fund, managed by Global Parametrics, which shares risks with Hannover Re. Insurance industry charity Humanity Insured provided a premium subsidy.