Victims of a worsening storm

Currently, millions of people in Asia are contending with destructive floods that have overrun their communities as the annual monsoon season has hit harder and earlier than usual. More than 400 people have been killed and 30 million left marooned or homeless in Bangladesh; in India, the numbers are similar.

These people are unlikely to enthusiastically pack movie theaters to see what it's like when nature unleashes its fury. But it's among those least able to afford a movie ticket that the impact of today's environmental disasters is taking its most dramatic toll.

Last year, more than 75,000 people died throughout the world as a result of natural catastrophes which caused a total of $65 billion in damages. But the reality is that more than nine out of every ten of such fatalities occur in the developing world.

What makes this situation particularly problematic is that unlike in rich countries, the vast majority of these victims do not have insurance. Over 60 percent of assets in the developed world are insured; in developing countries less than 2 percent -- the poorest of the poor who can least afford to lose assets have none.

In the developing world, uninsured asset loss traps entire populations in a vicious cycle of deepening, long-term destitution. For these populations the closest thing to insurance is international humanitarian aid.

Last year the World Food Programme alone provided food aid to over 100 million people, many of them victims of drought or floods like the 14 million Ethiopians who lost their crops because of insufficient rain. According to the world's largest reinsurance company, Munich Re, the decade of the 1990s saw a three-fold increase in the number of natural catastrophes compared to the 1960s.

In its latest report, Munich Re notes : "It is to be feared that extreme events which can be traced to climate change will have increasingly grave consequences in the future. This means that we must reckon with new types of weather risks and greater loss potentials."

While the insurance industry is coming to terms with the challenges that lie ahead, the international aid community must also find new ways of fulfilling its minimal insurance function for the world's most vulnerable populations. The critical thing will be, as the insurance industry has long recognised, to have sufficient contingency resources at the ready when sudden crises arise.

We simply do not have that financial capacity today. Humanitarian aid is a minimally coordinated orchestra of ad hoc appeals based on often subjective assessments with the timing and level of relief dictated as much by whatever aid happens to be available when it happens to be available. Nothing could be more inefficient from a financial point of view.

At last year's meeting of the G-8 group of industrialised countries in Evian-les-Bains, WFP put forward a Hunger Risk Insurance proposal. With support from the G-8, WFP, in partnership with the World Bank, would seek to harness recent technological and financial innovations-satellite weather data, index-based insurance, and catastrophe bonds that already underpin successful insurance schemes in the developed world-into a more effective system of insuring vulnerable populations against losses.

This scheme would shift the burden of risk away from crisis-affected families and on to humanitarian agencies like WFP, the World Bank, and their donors. It would enable agencies to insure poor populations against one of the most severe consequences of natural disasters -- asset loss resulting in starvation.

The proposal awaits action. While priorities at this year's G-8 meeting in South Carolina were focused elsewhere (Iraq, debt-reduction, etc), the insurance scheme remains on the table for action at next year's summit. Finding a practical and effective response to the unprecedented increase in natural disasters in the developing world is within our grasp.

Recognising the risks faced by poor people in developing countries as an insurance problem, it becomes clear that the expertise and resources of the insurance and financial sector can be brought to bear in protecting vulnerable populations. Together we can insure the world's poorest against the effects of disasters. We cannot simply leave it to Hollywood to provide a happy ending.

James T. Morris is the Executive Director of the United Nations World Food Program.