Lao PDR signs impact-based insurance policy with SEADRIF

The agreement continues Lao PDR’s push for innovative disaster risk financing.

The Government of Lao PDR has signed a new sovereign disaster risk insurance policy with SEADRIF Insurance Company, offering up to $16m in financial protection over two years.

The policy covers multiple perils, including floods, tropical cyclones, earthquakes, landslides, and related events.

Unlike traditional insurance models that rely on hazard data or modelled losses, this policy triggers payouts based on the number of people affected by disasters, as reported by the country’s National Disaster Management Office. 

Once predefined thresholds are met, payouts are made within 10 business days.

The agreement continues Lao PDR’s push for innovative disaster risk financing.

Since joining SEADRIF in 2021, the country has received $4.5m in quick payouts under similar arrangements. 

The new policy integrates insurance mechanisms into the national disaster response system, aligning with domestic laws and procedures.

Funded by the World Bank through the Global Shield Financing Facility and the Risk Finance Umbrella Multi-Donor Trust Fund, the premium is fully supported.

Any disbursed funds will be used according to a pre-approved contingency plan that meets the World Bank’s Environmental and Social Framework.

This marks one of the first national-scale insurance policies globally to use a government-reported, impact-based trigger. 

SEADRIF sees the approach as a potential model for other ASEAN countries seeking more locally appropriate disaster risk solutions.