WFP takes out drought policy

2006-03-06 22:06

Addis Ababa - The United Nations World Food Programme (WFP) announced on Monday in Ethiopia it had taken out the world's first humanitarian insurance policy with French re-insurer AXA RE covering drought in the east African country.

The pilot insurance project with Paris-based AXA RE, a subsidiary of insurer AXA, provides contingency funding of up to $7m in case of extreme drought during Ethiopia's 2006 growing season from March to October.

The insurance policy was billed by the WFP as "the first step in a process leading towards ex-ante risk management in developing countries".

WFP director James T Morris said the policy would offer the organisation "a way of insuring against drought and other disasters" on behalf of an estimated 17 million Ethiopians.

The project uses weather data from the Ethiopian national meteorological agency to establish the feasibility of disaster funding in the event of severe rain shortfalls.

The WFP director noted that six million people in the Horn of Africa, including Ethiopia, had already lost their life's savings through the decimation of their cattle and crops by drought. - Sapa-dpa

- SAPA