About LPP
The Livelihood Protection Policy (LPP) is a parametric, weather index-based insurance product that offers insurance coverage for wind that is associated with tropical storms and hurricanes and rainfall that is associated with excess rainfall or with tropical storms and hurricanes.
The LPP provides quick cash payouts after an extreme weather event, which helps individuals recover faster after such events. The product is ideal for individuals whose livelihoods can be critically affected by floods and strong winds.
The payouts are tied to a series of thresholds for wind speed and rainfall.
Any individual who believes that they are exposed to natural hazard risks and have the potential to be impacted negatively and/or are already vulnerable to natural hazard events associated with wind or rainfall, should purchase an LPP.
By having access to the LPP, persons may be able to recover faster following natural disasters. In other words, the LPP is designed to provide some level of stability to the financial situation of vulnerable or low-income individuals after a disaster by providing quick cash so they do not have to resort to coping strategies such as selling assets.
Purpose of the LPP
The LPP has been designed to:
Help protect the livelihoods of vulnerable, low-income individuals such as small farmers, tourism workers, fishers, market vendors, food vendors, and day labourers, by providing quick cash payouts following extreme weather events (specifically, those associated with wind and heavy rainfall).
Provide some stability to the financial situation of vulnerable, low-income individuals after a disaster through the injection of quick liquidity or cash payouts, allowing them to avoid adopting coping strategies that could lead them into poverty.
Quickly (within a few days) help people whose livelihoods are affected by a natural disaster, without them having to wait for help from “external” sources like the Government, friends, family, etc. If a farmer purchases the LPP for example, he or she will have a source of immediate funding to undertake activities such as replanting, draining fields, and reconstructing irrigation systems should the insurance policy trigger.
Improve the credit worthiness of individuals in the long term, giving them access to financial services that they previously may not have had access to. The LPP can be used in some countries as a form of collateral against a loan with a credit union, for example.
Strategic Benefits of the LPP
Quick recovery: Helps individuals restore their livelihoods without waiting for government aid, remittances, or external support.
Poverty prevention: Reduces the likelihood of vulnerable groups falling deeper into poverty after a disaster.
Financial inclusion: Enhances access to financial services and improves creditworthiness.
Shock-responsive social protection: Can be integrated into government SP systems to stretch relief budgets and improve targeting.
Poverty prevention: Reduces the likelihood of vulnerable groups falling deeper into poverty after a disaster.
Financial inclusion: Enhances access to financial services and improves creditworthiness.
Shock-responsive social protection: Can be integrated into government SP systems to stretch relief budgets and improve targeting.
