After the 2005 earthquake, the government of Pakistan decided to develop a more proactive approach in coping with these challenges, by putting effective ex-ante and ex-post disaster risk management measures in place. Global experience shows that risk transfer instruments, like insurance, deployed well in advance of a natural disaster, prove to be efficient tools for providing timely assistance to the affected populations. These instruments can be not only more affordable, but also more effective than ex-post measures in building resilience and reducing vulnerability. Following the 2010 floods, the Government of Pakistan expressed interest towards some form of disaster insurance that could help address the needs of very vulnerable communities. The National Disaster Management Authority (NDMA) has now been mandated by the NDMC to explore the option of developing a National Disaster Risk Insurance Framework for the disaster prone communities in Pakistan. The first phase of this project provided a set of design options for a national disaster insurance fund to the Government of Pakistan. The project consortium, consisting of MCII, DHI and a number of well-experienced international experts on insurance, risk management and fund design, reviewed some of the most successful models in the world and applied lessons learned from international best practices. Drawing upon these examples the project consortium provided recommendations of the most suitable options for Pakistan in line with the government’s objectives, capacity, and needs. Analysis of these options took into account the country’s diverse climatic, topographic and cropping systems, risk exposure; and its socio-economic, cultural, political and geographical factors. The main purpose for developing a National Disaster Insurance Fund would be to set up an effective and transparent mechanism with streamlined distribution channels and adequate funds, in place before the disaster strikes, so that the money reaches the beneficiaries in the shortest possible time. The Fund would be designed with four main principles in mind to ensure its sustainability: 1) Increasing the resilience of vulnerable communities by inter alia reducing risks; 2) ensuring transparency at all levels; 3) equitable distribution of money to all vulnerable communities without discrimination; 4) compensation to the real, targeted beneficiaries (safety net participants who are the poorest-of-the-poor, and transitory poor). Starting off in late 2014, MCII engaged in a second phase of the project to further facilitate the insurance fund based on the guidance by the Government. In Phase-2, MCII will develop and implement a market demand survey for the creation of weather-risk insurance products for low-income groups in Pakistan. This study, a) will increase awareness of risk management needs b) is policy relevant to the UNFCCC discussions on adaptation and loss and damage and c) will be used to design and implement insurance products for vulnerable people in Pakistan. The market demand study is an essential building block upon which weather-risk management approaches including insurance can be designed and implemented for microenterprises. It is possible that the lessons learned in Pakistan may have application in other vulnerable areas of the world, such as Africa, Latin America, and Asia. Development practitioners and their partners build the capacity in regions like Pakistan and other areas vulnerable to climate change impacts to improve understanding of the adaptation needs of low-income groups like microenterprise through the use of risk management tools like insurance. Based on the results of the demand study, the project consortium will engage in the further design of the insurance fund (incl. governance options, legal structure, risk transfer, etc.).