From Risk to Resilience: Strengthening Financial Preparedness in Southeast Asia

Pre-disaster financial planning pays off

In Southeast Asia, floods, typhoons, and landslides repeatedly disrupt lives, jobs, and economic activities. Between 2015 and 2020, disasters cost ASEAN countries more than $11 billion. As climate change intensifies, countries need not only stronger response systems but also faster and more predictable funding to protect populations and development gains. The Southeast Asia Disaster Risk Insurance Facility (SEADRIF) demonstrates how regional public-private collaboration can strengthen financial resilience, enabling governments to plan ahead rather than wait for aid. By providing fast, predictable funding and expanding capacity, SEADRIF initiatives are turning financial tools into core strategies for climate resilience.

Lao PDR: Fast Funds When They Matter Most

In May 2025, the Lao PDR became one of the first countries to adopt a sovereign disaster risk insurance policy with a people-affected impact trigger. This builds on earlier experience: in 2021, Laos purchased its first disaster risk insurance-a three-year hybrid product covering floods. One component provided payouts for medium or severe floods, while a second addressed smaller losses. The product relied on near-real-time flood monitoring, combining satellite and ground data to give fast, reliable information for decision-making.

The 2025 policy improves on this, most importantly by aligning the product structure with government expectations for payouts. With a two-year $3.4 million premium, it provides up to $16 million in coverage for floods, cyclones, earthquakes, and landslides, and introduces an innovative impact-based payout mechanism based on government-reported impact data. Once pre-agreed impact thresholds are met, payouts are disbursed within 10 business days, ensuring funds reach affected communities quickly. This new approach delivers funds where and when they are most needed. On September 1, 2025, a $2 million payout was made to Laos just six business days after over 300,000 people were reported affected by disasters.

Laos' premium is supported by a $3.6 million grant, financed by the Global Shield Financing Facility and the Risk Finance Umbrella Multi-Donor Trust Fund. Issued by SEADRIF Insurance Company, with partial risk transferred to international reinsurance markets, this two-year policy provides pre-arranged financial protection for 2025-2027. The grant also supports contingency planning and strengthened environmental and social safeguards, ensuring payouts are deployed swiftly, transparently, and responsibly.

SEADRIF: A Regional Platform, Built by Countries

Scaling up SEADRIF will close the protection gap and ensure that more countries and communities benefit from pre-arranged financial support. A SEADRIF 2.0 project is strengthening the fund's long-term institutional capacity, expanding its reach by developing new insurance products, deepening engagement with member countries, and enhancing regional coordination. By 2027, SEADRIF 2.0 aims to benefit at least 7.5 million people and businesses across the region, and to mobilize $18 million in private capital through reinsurance and other market-based mechanisms.

Though modest in size, the grants made to Laos are helping drive an important shift toward stronger financial preparedness across Southeast Asia. Laos benefits from a pioneering sovereign insurance policy with a smart, impact-based trigger-serving as proof-of-concept for solutions that can be adapted and scaled to close the protection gap. SEADRIF itself is on a firm operational and strategic footing, positioning the regional risk pool to expand both country participation and product offerings-a critical step toward achieving broader and more sustainable impact.