We Can Fix Emergency Aid with Disaster Insurance – Podcast with Stefan Dercon and Theo Talbot

August 16, 2016

We can’t stop natural disasters from happening, and despite our best efforts, man-made conflicts and the suffering they unleash are likely to continue. When such a disaster strikes, we are urged to send money, and many people do, very generously—but is there a better way to fund the relief effort? 

My guests on this week’s CGD Podcast believe that insurance can help. Stefan Dercon is the chief economist of the UK’s Department for International Development and a professor of economic policy at the University of Oxford. He recently coauthored the book “Dull Disasters? How Planning Ahead Will Make a Difference” with Daniel Clarke from the World Bank.  Theo Talbot is a senior analyst with CGD Europe who is co-running a new CGD working group on catastrophe insurance for humanitarian and emergency assistance.  

Under the current model, Dercon explains, governments wait until disaster strikes and then scramble for resources, which usually can’t come in quickly enough. “You may have made some kind of plan,” Dercon says, “but if only half the money comes in, how are you going to use it?” The lack of resources can also create competition between relief organizations, impeding any kind of coordinated response.  

Insurance could help change that, Talbot tells me: “Preparedness [for disasters] creates government capacity. It means that we can invest money where it’s most effective. And it means that we know how much we’re going to have brought to bear… rather than having to go to the international community and hope for the best, resulting in delayed, fractured, and mismanaged funding.”  

Listen to the podcast above, and learn more about disaster insurance in the new CGD report Payouts for Perils


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.