MR Microinsurance_2012_03_29.indd - International Labour ...

98 Emerging issues
Financial viability: Th e combination of the pooled reserves of the participating
countries and the fi nancial capacity of of the international fi nancial market ensures
sustainability, but mostly due to relatively low low payouts compared to actual damage.
Demand: Tool for climate-change management as money fl ows for faster relief,
but only at governmental level, no involvement of population.
Other: Need to address agricultural sector, as CCRIF provides greater value to
areas of economic value (major economic centres).
Preliminary lessons learned
1. Insurance pools reduce transaction costs due to coherent legal framework and
insurance conditions for all members.
2. As pools allow cover of high-level risks, they can constitute an element of cli- cli- cli-
mate change adaptation.
3. Parameters are diffi cult to design for smaller events, so that losses do not neces- neces- necessarily
trigger payouts (e.g. Hurricane Dean, Jamaica, 2007). In addition, para-
metric insurance can be diffi cult to explain.
4. Pools provide greater opportunity for risk transfer to capital markets.
Sources: Hellmuth et al., 2009; Young, 2010; UNFCCC, 2011.
4.3 Operational challenges and solutions
As most of the schemes highlighted in this chapter have only been operational
for a few years, some only on a pilot basis, the lessons and experiences remain
preliminary, but there is a growing body of evidence from which to begin to
draw initial conclusions. Certainly, the most obvious conclusion is that there are
considerable challenges. In particular, this section considers the challenges and
solutions associated with collecting weather data, developing and using indices,
claims management, stakeholder education and sustainability.
Box 4.7 Catastrophic farming insurance for climatic events, Mexico
Hard facts
Start: 2005
Scale: Macro
Model developer: Agroasemex
Risk carriers: Government of Mexico, Agroasemex
Risk covered: drought, fl ood
Number of clients: 800 000 farmers (in 2008)
Distribution channel: Federal/state governments