MR Microinsurance_2012_03_29.indd - International Labour ...
MR Microinsurance_2012_03_29.indd - International Labour ... MR Microinsurance_2012_03_29.indd - International Labour ...
96 Emerging issues the extended rains that occurred in Haiti during May and June 2011, a parametric- parametr parametricic only payout of US$1.05 million was was made to to Fonkoze. Fonkoze independently assessed borrowers’ damage and paid out US$1.01 million to over 3 800 clients, including loan write-off s. Fonkoze’s Fonkoze’s microloan clients have all been informed of and received training training in the catastrophic insurance cover. Challenges Hazard: Haiti is exposed to various natural hazards with signifi cant loss poten- poten- poten- tial. Earthquakes and hurricanes, as well as heavy rain, tend to to occur from time time to time. time. Basis risk: MiCRO covers 85 per cent of estimated basis risk up to US$1 million per annum annum on annual aggregate aggregate basis. Preliminary lessons learned 1. Public-private partnerships are a necessity for protecting the poor against natu- natu- natu- ral disasters. 2. Insurance targeted at low-income populations can be off off ered in a region signif- signif- signif- icantly exposed to natural hazards. 3. Insurance can both off er protection for an an MFI and create value for its clients. 4. Parametric covers can be supported when funding funding is available to absorb mis- mis- mis- matches between the parametric cover and real losses experienced. 5. Training of clients is important. Fonkoze’s borrowers have all been informed of of and received training in the catastrophic insurance cover. Source: Adapted from Morsink et al., 2011. Th e “macro” dimension can involve millions of people, and is typically organized at a national or international level. Important systems are found in the Caribbean, where the fi rst risk pool insures the governments of 16 Caribbean countries against hurricanes and other disasters (see Box 4.6). Th e poor are intended to benefi t from this cover, but it is the governments that are insured. In Mexico, the state-organized Fondos have been insuring farmers since 1988 (see Box 4.7), although these tend to be richer farmers. Access for small farmers continues to be diffi cult.
Microinsurance and climate change Box 4.6 Caribbean Catastrophe Risk Insurance Facility (CCRIF) Hard facts Start: 2007 after 18-month development Scale: Macro Model developers: Caribbean Community (CARICOM) Heads of Government, World Bank Risk carriers: CCRIF, international reinsurers including Swiss Re, Munich Re, Paris Re, Partner Re and Lloyd’s of London syndicate Hiscox Risk covered: Hurricane, earthquake, excess rainfall Number of clients: 16 countries Financial background: Capital from donors (~US$65 million) and annual premium (US$200 000 to US$3 million) by member countries Distribution channel: Caribbean Risk Managers Limited (CaribRM) Context Following the huge losses caused by Hurricane Ivan in 2004, the Caribbean Community Heads of Government, with the help of the World Bank, decided to implement a risk transfer programme programme for member countries to mitigate mitigate the the eff ects ects of natural disasters. Started in 2007, CCRIF insures its 16 member coun- tries against earthquakes, hurricanes and excess rainfall. Country risk risk profi les were created based on historical data to determine each country’s premium. Once a predefi ned level of shaking, wind speed or amount of rain is reached, payout occurs within 14 days. Payouts to date: 2007: ~US$1 million to the islands of Dominica and St Lucia 2008: 2008: ~US$6.3 million to the Turks & Caicos Islands 2010: ~US$7.75 million to Haiti (earthquake) and US$12.8 million for Hurricane Tomas (Barbados, St Lucia, St Vincent and the Grenadines); US$4.2 million for Hurricane Earl (Anguilla) CCRIF is unique, as it is the fi rst index insurance scheme linking various countries that have diff erent levels of development and diff erent risk exposure. Challenges Complexity: Pooling the risk of 16 countries raises the complexity of the product due to individual risk profi les and calls for increased communication and public relations regarding awareness-raising among member countries. 97
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<strong>Microinsurance</strong> and climate change<br />
Box 4.6 Caribbean Catastrophe Risk Insurance Facility (CCRIF)<br />
Hard facts<br />
Start: 2007 after 18-month development<br />
Scale: Macro<br />
Model developers: Caribbean Community (CARICOM) Heads of Government,<br />
World Bank<br />
Risk carriers: CCRIF, international reinsurers including Swiss Re, Munich Re,<br />
Paris Re, Partner Re and Lloyd’s of London syndicate Hiscox<br />
Risk covered: Hurricane, earthquake, excess rainfall<br />
Number of clients: 16 countries<br />
Financial background: Capital from donors (~US$65 million) and annual<br />
premium (US$200 000 to US$3 million) by member countries<br />
Distribution channel: Caribbean Risk Managers Limited (CaribRM)<br />
Context<br />
Following the huge losses caused by Hurricane Ivan in 2004, the Caribbean<br />
Community Heads of Government, with the help of the World Bank, decided to<br />
implement a risk transfer programme programme for member countries to mitigate mitigate the the<br />
eff ects ects of natural disasters. Started in 2007, CCRIF insures its 16 member coun-<br />
tries against earthquakes, hurricanes and excess rainfall. Country risk risk profi les<br />
were created based on historical data to determine each country’s premium.<br />
Once a predefi ned level of shaking, wind speed or amount of rain is reached,<br />
payout occurs within 14 days.<br />
Payouts to date:<br />
2007: ~US$1 million to the islands of Dominica and St Lucia<br />
2008: 2008: ~US$6.3 million to the Turks & Caicos Islands<br />
2010: ~US$7.75 million to Haiti (earthquake) and US$12.8 million for Hurricane<br />
Tomas (Barbados, St Lucia, St Vincent and the Grenadines); US$4.2 million<br />
for Hurricane Earl (Anguilla)<br />
CCRIF is unique, as it is the fi rst index insurance scheme linking various<br />
countries that have diff erent levels of development and diff erent risk exposure.<br />
Challenges<br />
Complexity: Pooling the risk of 16 countries raises the complexity of the product<br />
due to individual risk profi les and calls for increased communication and public<br />
relations regarding awareness-raising among member countries.<br />
97
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