MiCRO, the Microinsurance Catastrophe Risk Organisation, an index-based and parametric insurance company established in Barbados and founded by Fonkoze and Mercy Corps with the support of Swiss Re, has made payouts in two countries following the extreme rainfall caused by tropical storm Amanda earlier this season.
Tropical storm Amanda was a Pacific storm that drenched the Central American region, with extreme levels of rainfall causing flooding and landslides. Amanda than crossed into the Gulf of Mexico to become tropical storm Cristobal, which exacerbated the rainfall experienced for the region.
MiCRO said that parametric or index-based insurance policies under its programs were triggered in both El Salvador and Guatemala because of the rainfall caused by tropical storm Amanda.
To give an idea of how extreme the rainfall was, in El Salvador rainfall totals from the storm were at the average annual level over just a few days of precipitation.
“Once again, this unfortunate disaster reminds us of the need for tools to manage risk adequately and, in fact, this event was a critical test to demonstrate the value of insurance such as that implemented by MiCRO, Seguros Futuro and the Banco de Fomento Agropecuario two years ago for El Salvador”, explained Iker Llabrés, MiCRO’s Head of Growth for El Salvador.
Jorge Barrientos, the Head of Growth for Guatemala at MiCRO, where coverage is offered by Aseguradora Rural and distributed by Banrural, also said, “It is an inclusive insurance that operates based on predetermined parameters and protects clients against excess rain, in addition to drought and earthquake.”
The rainfall from tropical storm Amanda put the policies designed by MiCRO and its partners, with the support of global reinsurance firm Swiss Re, to the test.
The severity of the rainfall meant that policies were activated and payments triggered in both countries.
In El Salvador, almost 90% of insured clients received payments of 35-40% on average, with some payments reaching up to 100% of the sum insured in the most impacted areas. There was a particularly high concentration of policyholders in the most affected areas in El Salvador .
In Guatemala, rainfall totals recorded were lower and payouts of up to 50% of the sum insured were triggered, which benefited around 15% of the total portfolio of insureds in that country.
Payouts were swift in both cases, MiCRO reports, as the use of parametric triggers meant a quick settlement was possible.
As a reminder, the CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility) made one payout to Guatemala after the rainfall from these two storm events, with another made to the country of Belize as well.