How Vanuatu Leveraged Smart Insurance After Disaster

When a magnitude 7.3 earthquake struck Vanuatu in December 2024, the island nation responded with an unprecedented level of speed and efficiency — thanks in part to a forward-thinking approach to risk management. Just six weeks earlier, Vanuatu had secured parametric earthquake and tsunami insurance through the Pacific Catastrophe Risk Insurance Company (PCRIC), with risk modelling provided by Temblor. This move proved critical, enabling a rapid payout that supported immediate emergency efforts.

Unlike traditional insurance, which requires lengthy claims assessments and damage appraisals, parametric insurance triggers payouts based on pre-defined data thresholds, such as earthquake magnitude or shaking intensity. In this case, the parameters were met, and within days of the event, PCRIC delivered a $1.2 million USD check directly to Vanuatu’s prime minister.

The December 17 quake, centered near the capital Port Vila, claimed 14 lives, displaced 2,500 people, and affected over 20,000 residents by disrupting water supplies and business operations. The estimated cost of recovery reached $230 million USD. The quick availability of funds played a crucial role in kickstarting emergency response and relief.

Vanuatu is part of a region marked by high seismic activity due to the collision between the Pacific and Australian tectonic plates. With one of the highest subduction rates in the world, the area is prone not only to earthquakes but also tsunamis, cyclones, and volcanic eruptions — hazards that make traditional insurance costly and slow.

Parametric insurance, by contrast, offers speed and affordability, especially for smaller or developing nations. Although there is a risk that payouts may not perfectly align with actual damages, the benefits — immediate liquidity, minimal bureaucracy, and targeted disaster preparedness — are significant. For Vanuatu, this insurance model provided not just funding, but a sense of security and resilience in the face of growing climate and seismic risks.

The December 2024 event has brought renewed global attention to the role of innovative insurance solutions in disaster-prone regions. For insurers, governments, and tech partners like Temblor, Vanuatu’s experience is a case study in how data-driven modelling and financial preparedness can save lives and speed recovery.

As climate and seismic risks rise globally, parametric insurance could become a cornerstone of resilience planning — offering countries not just protection, but the ability to act quickly when disaster strikes. At Decode Global, we recognize the importance of integrating smart risk modelling, financial innovation, and real-time decision-making tools to support sustainable resilience strategies for vulnerable regions worldwide.