Syria drought triggers $7.9 million payout to World Food Programme

By Henry Gale

July 7 - (The Insurer) - The World Food Programme has received a $7.9 million payout from a parametric drought insurance policy for Syria developed with Howden, Hiscox and Swiss Re, WFP's lead advisor for climate and disaster risk financing and insurance said on Friday.

WFP's Mathieu Dubreuil described it as a one-in-50-year event and explained to Parametric Insurer that the policy's trigger was based on conditions in three areas of the country. "Two regions out of three triggered a 100% payout, and the third one an 80% payout,” he said.

The policy, initially announced in February, provides $9.25 million of coverage to fund drought relief in Syria. It first came about as WFP looked to extend its macroinsurance coverage to fragile countries outside the areas covered by the four regional risk pools, Dubreuil said.

Gareth Davies, Howden's head of parametric solutions, said the expedience of this claim payment was a key part of showing the value of parametric coverage.

When the Insurance Development Forum announced the policy, it said it would help WFP to respond quickly to droughts to protect development gains, "preventing vulnerable families from resorting to extreme coping strategies such as skipping meals, pulling children from school or selling essential livestock."

It added that in settings like Syria, political instability and ongoing crises can exacerbate the effects of climate shocks.