A new risk transfer product for urban landslides in the Manizales area of Colombia has been developed by Global Parametrics alongside Latin American catastrophe risk modeler ERN and Ingeniar, a private advisor on risk management to the local government of Manizales.
The product is being called the first parametric urban landslide insurance solution in the world and aims to secure disaster risk financing for an area of Colombia that is exposed to landslides that could have a direct impact on over 260,000 vulnerable people.
Under the management of Global Parametrics, the Natural Disaster Fund (NDF) will be used to back the risk transfer or insurance, alongside other reinsurance capital providers.
While, a rainfall triggered landslide model will be developed to aid in construction of the parametric trigger, using historical records from the rain-gauge network of Manizales and a large catalogue of historical events with ERN constructing the model and Ingeniar providing data and support.
Global Parametrics will provide the structuring expertise to construct the final product, while the risk transfer capacity is expected to come from the NDF, as well as the international reinsurance and capital markets.
The product is being designed such that it could be rolled out in other regions, or even countries, we understand.
Mario Ordaz, President of the Board of ERN explained, “We are very enthusiastic to collaborate in a project with such potential, that can disrupt the way on which catastrophe risk is transferred, besides benefitting the most vulnerable communities. It is of great interest for us, at ERN, to be able to use high quality scientific data with the cooperation of the local institutions of Manizales.”
Omar D. Cardona. CEO of Ingeniar Ltd. added, “Having detailed inventories of landslides by the City and Corpocaldas, besides records of previous rains for each case, together with a real-time warning system and hazard models developed by the National University of Colombia, makes Manizales an ideal natural laboratory.”
Hector Ibarra, CEO of Global Parametrics, also commented, “We are very pleased to join efforts with ERN and Ingeniar to develop this type of solutions. We see this project as a great opportunity to develop an innovative solution that promotes resilience for catastrophe risk and extreme climatic events.”