Insurance solutions for over 46,000 people in the aftermath of torrential rains
Published
Read time
Flooding and landslides caused by torrential rains across Central America have claimed dozens of lives and displaced countless people in the 2024 rainy season.
- In 2024 Howden acquired MiCRO, who design and implement coverage for underserved populations in Guatemala, El Salvador, Colombia and Mexico
- Insurance products from MiCRO and local partners have led to significant payouts during a disastrous rainy season in Guatemala
- To date, payouts have exceeded US$2 million for over 46,000 individuals
In Guatemala, as of September 2024, there have been at least 28 deaths, tens of thousands of people have had to evacuate their homes, more than 8,600 buildings have been damaged and over 400 roads and at least five bridges have been destroyed.
With the rainy season usually lasting until around October, we have yet to see the full extent of the damage.
The geography and geology of Guatemala, the most populous country in Central America, make it one of the world’s most vulnerable countries to hazards and extreme weather events. Guatemala is at risk of earthquakes, volcanic eruptions, floods, droughts and everything in between.
For smallholder farmers as well as micro and small business owners, these disasters can be catastrophic to their businesses and livelihoods. Traditional insurance, if accessible at all, is not necessarily an affordable or appealing solution for vulnerable and low-income workers.
While it is a privilege many of us take for granted, these communities are not able to invest in protecting their own future.
At Howden, we've implemented insurance solutions that have so far led to over US $2 million in payouts for tens of thousands of people in Guatemala during the 2024 rainy season.
Insuring the underinsured
In May 2024, Howden acquired the Microinsurance Catastrophe Risk Organisation (MiCRO), a microinsurance specialist that designs and implements coverage for underserved populations that are vulnerable to natural catastrophes. Our shared vision is to scale access to microinsurance and help those most at risk to invest in their future.
The company was founded in the aftermath of the 2010 Haiti earthquake and today operates in Guatemala, El Salvador, Colombia and Mexico.
In 2016, MiCRO launched its first risk management solution, an index-based insurance that covers relevant risks that affect the productivity of small farmers and micro-entrepreneurs in Guatemala.
The solutions designed by MiCRO and its local partners have made Guatemala an example of how to insure vulnerable communities against climate risks.
As of 2023, more than half of MiCRO’s policyholders are women and smallholder farmers.
While we certainly cannot prevent catastrophes caused by extreme weather events from happening, what we can do is help empower individuals to reduce their vulnerability and/or speed up their recovery from the effects of such events. Easily said, but really powerful when you actually see it in action.
Helping communities with over US$2m in payouts
MiCRO’s insurance solutions are index-based, where automatic payouts are triggered when a predetermined parameter related to an event is reached – for example, a certain level of rainfall or the intensity of an earthquake.
Once the parameter has been attained, the policyholder receives their payout in a matter of days, rather than having to file a claim and wait for someone to come and assess any damage. The process is automated, transparent and can be set to trigger even before a disaster strikes.
Not only is this form of pre-agreed finance important for the individual policyholder, but the contractual certainty makes countries more investable – it’s a virtuous circle for these vulnerable nations.
During this rainy season, MiCRO and its local partners' various parametric products have led to payouts exceeding US$2 million to date, empowering over 46,000 individuals with payouts ranging from US$10 to $130.
Changing the insurance narrative
At Howden, our Climate Risk & Resilience team is on a mission to lead the way in de-risking the climate challenge by mobilising investment and protecting assets, businesses and livelihoods. We aim to find sustainable ways to help vulnerable communities around the world prepare for the future.
We also incubated Humanity Insured, a global not-for-profit backed by the insurance sector. Launched in July 2024, Humanity Insured is on a mission to leverage private and philanthropic capital at scale, unlocking billions in insurance protection for the 3.6 billion people living on the climate crisis frontline.