A strategic collaboration to help close the protection gap:
Since 2016, Rain++ has supported the Microinsurance Risk Organisation (MiCRO) in the design and operational implementation of index-based, inclusive insurance products to cover the underserved population against natural disasters, exacerbated by climate change. Targeted at small farmers and business owners, with this type of insurance pay-outs are automatically triggered when a predetermined index (e.g. rainfall accumulation during previous days) is exceeded, without the need to assess actual losses, as is required with traditional insurance products. The automatically triggered compensation helps the beneficiaries get back on their feet right after a natural disaster occurs, while also making the overall mechanism more objective and transparent.
As of 2021, MiCRO’s index-based insurance products against excess rainfall, drought and earthquake are available in El Salvador, Guatemala and Colombia. Work is currently underway to launch similar products in Mexico.
Rain++ has primarily supported the design of the excess rainfall and drought insurance products. This has entailed extensive analysis of satellite rainfall and vegetation index products across the countries of interest, including:
- Quality assessment of multiple satellite products to inform product selection,
- Enhancement of rainfall estimates through combination of satellite estimates and data from ground stations, and
- Statistical analysis and modelling -including stochastic time series generation and extreme value analysis- to support MiCRO’s actuaries in defining a fair and sustainable pricing structure.
Aside from product design, Rain++ has also supported the implementation of the computational engine behind MiCRO’s calculation platform, which extracts data from relevant sources to detect and notify triggering events.