Catastrophic Microinsurance in Central America

Central America is a natural disasters prone region where large vulnerable populations suffer over-proportionately from increasing frequency and impact of climate change events, as traditional disaster coping mechanisms are eroding with growing environmental pressures and rising urbanisation. The public-private development partnership with Swiss Re, FOMIN, and KfW’s Climate Adaptation Fund supports MiCRO in strengthening the disaster resilience of at least 80’000 vulnerable households by 30.9.2016.

Country/region Topic Period Budget
Central America
Employment & economic development
Climate change and environment
Informal banking & insurance
Disaster risk reduction DRR
Environmental policy
01.03.2013 - 31.03.2022
CHF  6’700’000

Insurance can be an effective risk management tool - combined with disaster risk reduction (DRR) and financial education - for vulnerable households to recover and resume their productive activities when struck by natural disasters. The faster they receive insurance pay-outs, the less they are forced - as in the case of slow and uncertain relief operations - to revert to negative coping strategies, such as selling off assets at distress, depleting their savings, and becoming over-indebted to money-lenders.


Reduction of vulnerability to natural disasters (i.e. hurricanes, earthquakes, and excess rainfall) of low-income households in Central America thereby reducing their risk of falling into a poverty trap, if hit by natural disasters.

Target groups
  • The ultimate direct beneficiaries are vulnerable low-income households who are clients of the 2-3 pilot MFIs. These clients are micro or small (mostly informal) entrepreneurs who have borrowed for their business activities being the basis for the livelihood of their households.
  • Direct beneficiaries are the 2-3 pilot MFIs, 2-3 first insurers, and MiCRO.
Medium-term outcomes
  • Institutions in target areas offer and sell effective, relevant and efficient quality of MiCRO’s catastrophe insurance products to at least 80’000 low-income MFI clients (outreach).
  • Low-income households use less negative coping strategies (if struck by natural disasters) due to catastrophe insurance coverage.
  • Vulnerable low-income households are less exposed to natural disaster risks due to adopted DRR measures.

Results from previous phases:  

  • Establishing the risk mapping and risk modelling systems indicating the likely operational and future commercial feasibility of MiCRO’s catastrophe insurance products in Central America.
  • Lessons learnt from the difficulties encountered by Fonkoze in Haiti in offering catastrophe insurance to its active borrowers.
  • Redcamif is committed to partner as Third Party Insurance Administrator (i.e. offering insurance management ser-vices, notably claims management & settlement).

Directorate/federal office responsible SDC
Credit area Development cooperation
Project partners Contract partner
Private sector
  • Foreign private sector South/East
  • MiCRO is the project implementation partner, being a licensed re-insurance company registered in Barbados. Swiss Re bringing in the required (re)insurance expertise and running MiCRO through seconded CEO since 8/2013. KfW’s Climate Insurance Fund structuring SDC’s ‘capitalisation’ funds in MiCRO. The Climate Insurance Fund will nominate a Board member for MiCRO. FOMIN co-funding the “TA & Capacity Building” component and bringing in its network with MFIs and governments.

Budget Current phase Swiss budget CHF    6’700’000 Swiss disbursement to date CHF    6’715’492
Project phases Phase 1 01.03.2013 - 31.03.2022   (Current phase)