This week, the World Bank’s (WB) Caribbean Catastrophe Risk Insurance Facility (CCRIF) reported that “a payment was made on 1 of July 2024 of US$6 million 376 thousand 184 to the Government of Guatemala under its excess rainfall policy following the heavy rainfall that occurred from June 13 to 19.”
That is, the contracted policy was activated due to the rainfall pattern recorded in June, when winter began in Guatemala, which has caused a series of problems, especially in the road network of the South Coast and other departments, due to flooding, landslides and destruction of highways and rural roads.
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Guatemala contracted the policy in force in May of last year, for an amount of US$800 thousand, equivalent to regarding Q6.2 million, but it only covers excess rainfall, but the statement also specifies that this is a first payment corresponding to 2024.
Parametric insurance is the term used to refer to operations that help limit the financial impact of events that are devastating for countries, such as a storm or tropical cyclone, earthquakes and excessive rainfall, thus offering immediate availability of resources when a loss occurs and the respective policy is activated.
Count
In June 2020, Guatemala received a disbursement of US$3.6 million, also due to the excess rainfall for nine days caused by tropical storms Amanda and Cristóbal.
“A payment was made on 1 July 2024 of US$6 million 376 thousand 184 to the Government of Guatemala under its excess rainfall policy following the heavy rainfall that occurred from June 13 to 19”
Communiqué from the Caribbean Catastrophic Risk Insurance Facility
On that occasion, the policy was activated due to the rains that had been reported since May 31 and caused flooding and landslides; the storm had dissipated but the remnants became Tropical Storm Cristobal, considered a rare cross-cyclone with origins in the Pacific basin. This phenomenon hit several Central American countries.
According to CCRIF, Guatemala became a member in 2019, and in its first year of membership in the mechanism it received its first disbursement.
Securing critical infrastructure
Juan Carlos Zapata, executive director of the Guatemalan Foundation for Development (Fundesa), said that CCRIF provides a critical component of the disaster risk financing strategy, within the framework of adaptation to climate change.
“These funds are important to strengthen countries’ capacity to reduce vulnerability to disasters, as well as to promote efficiency and transparency in public spending following disasters,” he said.
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Asked where this disbursement should go, Zapata responded that since this is an emergency, it should focus on the purchase of Bailey bridges that will be required this year on various road sections in the country, “as we are already seeing in the section from Palín to Escuintla and on the route to the Atlantic. These funds might also support the strategy of the Ministry of Communications, Infrastructure and Housing (Micivi) to acquire and operate bridges in a more accessible way.”
Regarding having a policy that covers future risks, he stressed that Guatemala needs to generate more efficient models to maintain strategic infrastructure. An urgent need is for the Congress of the Republic to act according to the needs of the population and approve the general road infrastructure bill that is pending in the Economic Commission, but additionally, it is necessary to prioritize reforms to the Law of Alliances for the Development of Economic Infrastructure (Anadie) that help create a better ecosystem of Public-Private Alliances.
“This would solve the medium-term impact of natural phenomena or events that currently affect the country’s critical infrastructure,” he concluded.
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