Guatemala is highly exposed to natural disasters.

Hurricanes, landslides and volcanic activity are hazards thatoften impact the country. In 2010 alone, two consecutive disasters— Tropica Storm Agatha and the eruption of the Pacaya volcano —caused an estimated $1.55 billion of damage, accounting for 4.1percent of the country’s gross domestic product.

Each disaster has a devastating impact not only on lives andfamilies, but on livelihoods as well, often making financialrecovery difficult after a natural catastrophe. In turn, thisaffects the economy and impacts the country’s growth anddevelopment potential for years to come.

One solution is MiCRO — a specialty re-insurance company and socialenterprise focused on the consequences of natural disasters,bridging the divide between the world’s insurance markets and themost vulnerable, low-income people. MiCRO’s goal is achieving theinnovations that will unlock the offering of microinsurancepolicies that are renewed each year and achieve scale.

Swiss Re recently partnered with MiCRO for the launch of“Esfuerzo Seguro,” the first natural catastrophe microinsurancecover in MiCRO’s Central American Program.

Coverage for drought, rain andearthquake

Esfuerzo Seguro is the first index protection offering businessinterruption cover to rural populations in Guatemala for lossescaused by severe drought, excess rain and earthquake. Morespecifically, the product is targeted to support financiallyvulnerable individuals engaged in small farming or entrepreneurialactivities.

Swiss Re supports MiCRO in this progressive endeavor to furtherexpand access to insurance for people who find it more difficult torecover from the severe impacts of weather. Swiss Re is committedto supporting MiCRO as it expands this first-of-its-kind parametricprotection via CADME (The Central America Disaster MicroinsuranceExpansion Programme).

How it works

Esfuerzo Seguro is distributed by insurer Aseguradora Rural,bundled with loans provided by bank Banrural. The product wasdesigned to meet the affordability standards indicated by clients,and it will offer quick, transparent and hassle-free payments incase of risk events. The cover is complemented with a disaster riskreduction component, and the delivery of a 72-hour emergency kitwith specific training on disaster risk preparedness is at thecore. In addition, weather information will be shared via mobilephones with the support of CONRED (Guatemalan National Coordinator for DisasterReduction) and mobile services provider Tigo.

The product was launched in mid-November as a pilot in the areasof Huehuetenango and Chiquimula, which will allow for testing andadjustment of operational and sales aspects, followed by a scale-upon the national level.

Following the successful launch in Guatemala, MiCRO and Swiss Reare working with partners to replicate the product in El Salvadortargeted to launch in early 2017.

Related: How parametric insurance can help after naturalcatastrophes

Paula Pagniez is senior microinsurance specialist forSwiss Re. Connect with her via LinkedIn