The Government of Guatemala has implemented an agricultural insurance scheme designed to protect smallholder farmers from heavy rains and prolonged droughts.
The parametric and catastrophe insurance was designed by the Swiss Re backed Microinsurance Catastrophe Risk Organisation (MiCRO) for the Ministry of Agriculture (MAGA) and is operated by Crédito Hipotecario Nacional (CHN).
The head of MAGA, José Ángel López, explained that Guatemala has diverse climatic variables, and producers need to have economic resources to make up for a possible loss in their crops and empower them to be able to plant again.
Carlos Boelsterli, CEO of MiCRO, added that the MAGA product will strengthen the most vulnerable populations, even in the most remote corners of Guatemala, in large part due to the face that the insurance scheme is not linked to other financial products (such as credit), and has a compensation method that does not require the insured to be banked.
Boelsterli also indicated that this approach could be replicated in other countries that are interested in improving risk management and risk transfer in the face of natural disasters.
Guatemala’s new parametric insurance will be automatically activated when an excess rainfall or drought reach agreed levels, with different parameters set for different areas and coverage periods considering the nuances of each of the country’s climatic zones.
The launch provides coverage for more than 6,000 producers, while the goal is to reach 40,000 during 2022, and the product will be accompanied by financial education modules that promote holistic risk management practices.
MiCRO is a socially oriented commercial enterprise with a focus on Latin America, and is supported by Mercy Corps, the Swiss Agency for Development and Cooperation, the Climate Adaptation Platform managed by KfW and Swiss Re.
