The Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) have each taken significant steps toward strengthening financial resilience against one of their most pressing climate risks – drought.
Over recent weeks, consultations in FSM and RMI have brought together national agencies, the Pacific Catastrophe Risk Insurance Company (PCRIC), technical specialists from GeoSY LLC, and the Climate Finance Capacity Support Programme (CFCSP) to design sovereign parametric drought insurance products.
Funded by the New Zealand Government through the CFCSP, the initiative aims to create tailored insurance solutions that will provide rapid and predictable financial support when pre-defined drought thresholds are reached. This will enable both governments to respond swiftly and effectively to future drought events – an increasingly urgent need as climate change drives more frequent and severe droughts across the North Pacific.
GeoSY LLC, was contracted by the CFCSP to lead the technical design and is reviewing historical drought data, engaging with government agencies to assess response plans and costs, and developing indices and risk profiles that meet international (re)insurance market standards.
Together, these efforts build on PCRIC’s earlier experience developing a drought insurance product for the Kingdom of Tonga, which provides a strong foundation for expanding drought resilience across the region.
PCRIC CEO, ‘Aholotu Palu, welcomed the progress:
These consultations mark an important milestone in our collective effort to build stronger financial resilience in the Pacific. With CFCSP’s support and technical expertise from GeoSY, we are moving closer to providing governments with timely and predictable funding in times of drought.
Following productive discussions with partners, initial policy structure will be developed and iterated through the rest of 2025 with a view to PCRIC being ready to issue policies for FSM and RMI in early 2026.
The consultations in FSM and RMI will be followed by similar engagements in Nauru where the CFCSP is also supporting the development of a national drought management plan.
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Feature image (left to right): Simon Young, GeoSY LLC; Viktoria Seifert, GeoSY LLC; Reginald White, Director / Meteorologist in Charge, RMI Weather Service Office; Lee Jacklick, Data Acquisition Program Manager, RMI Weather Service Office; Nick Leffler, CFCSP.