Southeast Asia is a diverse region home to almost 650 million people with a combined GDP of more than US$2.7 trillion. But countries across the region are heavily exposed to disaster and climate shocks that affect the lives and livelihoods of its populations and critical operations of their economies. Strengthening the financial resilience of ASEAN countries to these risks is critical to support their economic growth, fiscal stability, human development, and poverty reduction efforts.
To make this vision a reality for each country and the region, ASEAN+3 countries, comprising Southeast Asian countries plus China, Japan, and the Republic of Korea, have teamed up to work together for better financial resilience. ASEAN+3 countries, comprising Southeast Asian countries plus China, Japan, and the Republic of Korea, have teamed up to work together for better financial resilience. A landmark agreement took place at the margins of the ASEAN+3 Finance and Central Bank Deputies Meeting on December 14, 2018 in Busan, the Republic of Korea, where representatives of the Finance Ministries of Cambodia, Indonesia, Japan, Lao PDR, Myanmar, and Singapore signed a Memorandum of Understanding for the establishment of the Southeast Asia Disaster Risk Insurance Facility or SEADRIF.
SEADRIF will be established as a facility for the benefit of all ASEAN countries initially comprising a trust and an insurance company in Singapore, in partnership and with technical support by the World Bank.
SEADRIF will be a regional platform to provide ASEAN countries with financial solutions and technical advice to increase their financial resilience to climate and disaster risks. By supporting pre-disaster planning and post-disaster relief and reconstruction funding, SEADRIF protects people and their livelihoods, and contributes to ongoing economic development and poverty reduction.
Through the establishment of SEADRIF, ASEAN+3 countries are demonstrating vision and leadership to be at the forefront of developing and implementing innovative financial solutions to better manage the impact of disasters. This will also crowd in private sector capital to complement scarce public funds in the aftermath of a disaster. SEADRIF will be Asia’s first regional facility to provide climate and disaster risk financing and insurance solutions--including a regional catastrophe risk insurance pool. SEADRIF will be Asia’s first regional facility to provide climate and disaster risk financing and insurance solutions--including a regional catastrophe risk insurance pool.
The signing ceremony was attended by representatives of the Finance Ministries of Cambodia, Indonesia, Japan, Lao PDR, Myanmar, and Singapore, and observed by the ASEAN Secretariat and the World Bank.
Credit: Ministry of Finance of Japan
The World Bank had the privileges to support this initiative since the very first discussions, including through components in IDA projects that support disaster risk management in Cambodia, Lao PDR, and Myanmar and with in-depth technical support. At the request of participating countries, the World Bank will continue to serve as the Lead Technical Partner to the facility through its Disaster Risk Financing and Insurance Program. This builds on experience supporting the establishment of similar pools in the Caribbean (Caribbean Catastrophe Risk Insurance Facility) and the Pacific (Pacific Risk Assessment and Financing Facility).
The establishment of SEADRIF is enabled with generous support by donors and international partners. Japan and Singapore are both early supporters as well as members of the initiative. The Rockefeller Foundation provided seed funding to help develop the concept and turn tentative conversations into reality. The Centre for Global Disaster Protection has provided important technical inputs.