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Microinsurance Catastrophe Risk Organisation (MiCRO) - Alliance on Natural Hazard Risk Transfer Solutions

Pays
Guatemala
+ 2
Sources
IDB
+ 3
Date de publication
Origine
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Central America is a region that is highly exposed to natural hazards, with the effects of climate change making natural disasters an ever more common occurrence. Earthquakes, hurricanes, tropical storms, and droughts continually cause damages that are particularly acute for vulnerable low-income populations who lack an adequate safety net. According to data from the Central American System of Integration (Sistema de la Integración Centroamericana, SICA), 250 extreme events have been registered between 1930 and 2008. The financial losses of the events between 1930 and 2008 have been estimated at US $14 billion (CCAD-SICA, 2010). Unfortunately, despite such high exposure, access to insurance against natural disasters is extremely low across all of Central America.

MiCRO was founded in the wake of the 2010 Haiti earthquake by the international NGO, Mercy Corps, and the largest microfinance institution (MFI) in Haiti, Fonkoze, as a reinsurance company specialising in the design of risk transfer solutions for natural catastrophes to the unserved and underserved population.

MiCRO’s objective is to design, implement and evaluate sustainable and holistic risk management solutions that increase resilience against natural disasters for vulnerable, low-income populations. From 2012 to 2015, MiCRO operated as a reinsurer for its insurance program in Haiti, providing an innovative structure that aimed to minimize basis risk for the policyholder borrowers of Fonkoze. When it was determined that the index reinsurance provided by Swiss Re overpaid or underpaid, when compared to payouts made to policyholders based on actual losses, MiCRO would retain or contribute the difference.

In Central America, MiCRO continues to work towards solving the issues related to basis risk, but does so acting as a service provider to the risk takers, and a market enabler. MiCRO designs and implements innovative index insurance products that aim to minimize basis risk. However it is MiCRO’s intention to act as a reinsurance company in the near future, performing the role of an “aggregator” for international reinsurance companies, while retaining some of the risk itself.