Catastrophe microinsurance facility launched for Haiti

A number of high profile organisations within the risk transfer and reinsurance industries have teamed up to help bring affordable catastrophe insurance to the Caribbean island of Haiti. The innovative, donor-capitalised insurance facility called the Microinsurance Catastrophe Risk Organisation (MiCRO), has been set up to target the country’s ‘informal sector’ – the organized poor who have taken steps to increase their economic standing and stability through the creation of small businesses.

Founding partners of MiCRO include Guy Carpenter subsidiary GC Micro Risk Solutions^SM (GC Micro), Swiss Re, Caribbean Risk Managers Limited (CaribRM), Mercy Corps, a global relief and development agency; and Fonkoze, Haiti’s leading microfinance institution.

Policies that MiCRO issues are aimed at existing microfinance clients and provide them with protection against a range of specific natural catastrophes using parametric triggers and an innovative settlement process. As with index based insurance, these policies will payout based on actual weather and disaster conditions making them easier to understand, payout rapidly and more predictable for policyholders.

MiCRO is seen as an opportunity to prove a scalable, viable disaster microinsurance facility which could have the potential to be rolled out to developing nations all over the world.

“Microinsurance is vital in countries where there is high exposure to catastrophes and limited economic means to recover quickly after an event has occurred” explains Nikhil Da Victoria Lobo, Vice President, Swiss Re. “Our ultimate goal is to build bottom-up and top-down solutions to help nations foster long-term economic development and stability.”

“The development of innovative parametric insurance tools has provided opportunities to help protect the world’s most vulnerable from the vagaries of the current and future climate, as well as geophysical risks such as earthquakes,” says Simon Young, CEO of CaribRM. “The MiCRO project in Haiti helps the social and economic development of individuals and the nation and launches a program that has global application.”

“When private risk financing mechanisms fail or are insufficient, the public sector and low-income individuals are often left to foot the bill. Recent occurrences in Haiti underscore the importance of developing proactive and innovative public-private risk financing solutions like MiCRO to address catastrophic exposures.” said Alex Bernhardt, Head of GC Micro.

MiCRO is seeking to work with providers of microfinance in Haiti to introduce their product to their clients. It’s a model that has worked in other countries such as India and the Philippines where microinsurance is seen as a way to help protect people with microfinance loans from defaults caused by weather or disaster.

More information can be found on Guy Carpenters blog here.