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Drought insurance for 3rd world

Ensure quick response to famines etc
  (+5)
(+5)
  [vote for,
against]

Introduce an insurance pool for 3rd world countries that will pay out to those countries that are experiences extreme local weather (drought and to lesser extend storms)

Mechanisms - initially the premium is paid by donor countries - Upon pay-out the beneficiory-country start to contribute a -reduced- yearly premium - pay-out is driven by simple parameters e.g. if < 250 mm rain in a year, the policy will pay EUR 1MM*(250- [rain fall experienced])

Benefit - response to famines become upto 6 months earlier; local food resources don't need to be depleated (i.e. they can use the seeds for next year) and people don't need to become disfunctional & start dying due to the famine - No discussion necessary whether these countries should get support

Extension - cover all those risks that cannot be overcome by these countries through good preparation/government/"business" mgmt (e.g., Asian flu pandemy, floods (as long as it is not feasible to build dikes), ...)

ducroo, Oct 21 2007

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       Great idea, assuming you can find an underwriter who will be willing to take the risk.
zen_tom, Oct 21 2007
  

       Insurance is much better than hoping for charitable aid. An ongoing gift of insurance would mean that countries would know exactly what they are covered for and to what extent, allowing them to target uncovered risks using whatever's left after their military budgets instead of duplicating provisions which are likely but not guaranteed to be supplied by foreign aid in the event of catastrophe. [+]   

       Policy terms could include provisions which mean claims can only be made by legitimately elected governments and payments made requiring full double entry accounting down to the last cent in order to substantiate the claim (making corruption and siphoning harder).
vincevincevince, Oct 21 2007
  

       Suprisingly good (+). I am quite suprised the U.N hasn't come up with this yet.
Shadow Phoenix, Oct 21 2007
  

       We need this here in GA right now. We're down to about 80 days of drinking water for the whole of north georgia.
bleh, Oct 21 2007
  

       Insurance isn't magic - you can't just ask to insure against something that you think might happen - or at least, you can, but it costs a lot more...   

       So I'm still not sure this is viable - many of the insurance (and reinsurance) companies got badly burned by the whole Katrina thing - and they've not really got back up to speed.   

       Going off on a tangent for a moment, I heard a rumour that a lot of the Katrina payouts were never made, because the risk had been sold on, repackaged, and resold over and over again (somewhat like the Sub Prime Lending issue, only instead of spreading the risk out, it was instead distilled and concentrated), so that in the end, a number of small huts in the middle of the Caribbean were somehow listed as the registered underwriters of trillions of dollars of insurance related risk - when Katrina arrived, and blew everything away, the legal owners of these reinsurance huts had 'moved on', leaving governments and other authorities to foot the bill, and most of the insurance companies who had initially taken the premiums whistling innocently because they were no longer responsible.   

       Insurance is a 'hot-potato' game - the last one holding the package when the game stops is the unlucky one who gets to pay the bills. I don't think any serious-minded insurance vendor is going to want to be the one holding the bag when everything kicks off.
zen_tom, Oct 21 2007
  

       I agree with [zen tom] - This insurance would end up as a traded commodity. We need to work towards a less greedy, fairer world, and not prop up the one where one country, which has only 5% of the world's population, thinks it can continue to gobble up 25% of the world's resources, then toss a few coins into a charity fund when they feel like it, to gain impunity credits.
xenzag, Oct 21 2007
  

       So [zenzag], if you can't instantaneously make the world a land of happy rainbows and gumdrops, it's not worth fixing anything at all. Seriously??   

       This is a fantastic idea, and it would absolutely work. You can insure ANYTHING if you have sufficient data to determine an accurate rate, and weather data is plentiful. [zen_tom], I don't know where you're getting the idea that there's some sort of special overhead to some events and not others when it comes to insurance. There doesn't have to be at all. Get the rate correct, and you can insure against mosquito bites or asteroid impacts, or anything you want, and it will be win-win, if the insurer's bankroll is appropriate, and the buyer is risk-averse enough.   

       If insurers got burned during Katrina, it's because they either suck at math, or they knowingly gambled irresponsibly on some short term scheme, etc. Either way, their fault, and preventable if they were running their company correctly.
Smurfsahoy, Feb 07 2009
  
      
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