Japan is spearheading a new risk initiative aimed at mitigating the destabilising effects of natural disasters in the region. The Southeast Asia Disaster Risk Insurance Facility is expected to be announced in May at the Asian Development Bank board of governors' annual meeting, according to the Nikkei Asian Review.
The purpose of the facility is to provide immediate financial relief after natural catastrophes to affected nations and should benefit a range of countries in Southeast Asia. It should be operational by 2019.
Japan's ministry of finance has been working to set up the new insurance framework in Laos, Myanmar and Cambodia and it could eventually be extended to other ASEAN members.
Countries signing up to the facility will make the insurance pay outs while Japan will provide funding for the launch of the facility. According to the Nikkei report, the parametric disaster facility will use reinsurance from both Japanese and global providers.
It is hoped that the facility will quickly reduce financial risk in Southeast Asia occasioned by frequent and massive natural disasters – leading to greater financial sector and political stability.