IFRC-DREF Insurance is an innovative finance mechanism that leverages the power of the private sector to make stretched government donor contributions go further.
Through the insurance mechanism, instead of providing money to fund disaster responses as a traditional grant, donors have the option to pay the insurance premium. This stretches the value of their contributions and transfers the risk to the private sector if IFRC-DREF funding requests relating to natural hazards exceed available resources.
The approach uses reinsurance markets to lay off the risk of excessive natural hazards and ensure funds for response are available in a timely and reliable manner, even in periods of excessive or unanticipated demand.
While direct donor contributions to IFRC-DREF will always remain necessary, IFRC-DREF Insurance provides a contingency financing layer and ensures the IFRC network can be there for people affected by disasters quickly, efficiently, and reliably.
