3-5-2024 (SINGAPORE) The Southeast Asia Disaster Risk Insurance Facility (SEADRIF) will be transformed into an international organization by ASEAN+3, comprising the Association of Southeast Asian Nations along with Japan, China, and South Korea. The revamped initiative, which will have its own dedicated staff, is expected to become fully operational as early as next month.
According to Swiss Re, a leading reinsurance company, a staggering 85% of economic losses caused by natural disasters in Asia between 2014 and 2023 were not covered by insurance. This significant portion of damages, known as the protection gap, poses challenges for developing countries and emerging markets, where insurance enrollment rates remain low. The lack of coverage slows down recovery efforts and strains governments’ financial resources when disasters strike.
Yoshihiro Kawai, an adviser to Japan’s Financial Services Agency and former secretary-general of the International Association of Insurance Supervisors (IAIS), will chair the SEADRIF initiative. Kawai’s extensive experience in the insurance industry will be invaluable in driving the initiative’s mission forward. A key focus of the project will be education, offering programs for public policy planners and administrators in each country to enhance their understanding of disaster risks and promote wider adoption of insurance coverage.
The initiative also aims to facilitate the development of data infrastructure for analyzing flood and disaster risks. Additionally, it seeks to create opportunities for policymakers from ASEAN+3 countries to engage in regular discussions on natural disaster preparedness, including insurance coverage.
SEADRIF Insurance, established in Singapore in 2019, will provide coverage for natural disasters to Southeast Asian countries. The company, with Japan as its largest donor, began offering insurance to the government of Laos in 2021 as compensation for flood damage.
The protection gap is a global challenge, with insurers tightening underwriting conditions due to the increasing risk of costly natural disasters. In a notable example, U.S. insurance group Allstate announced in June 2023 that it would halt the sale of new home insurance policies in California, a state prone to disasters.
Addressing the protection gap was a central theme at the annual IAIS conference held in Tokyo last November. The IAIS plans to share its expertise with countries where authorities have limited knowledge in the field of disaster insurance.
In 2022, the Philippines introduced a risk-sharing framework in collaboration with the private sector to offer typhoon and flood insurance coverage, showcasing an effective model of public-private cooperation.
