I have been working as a climate risk insurance expert in this remarkable country for many years, exploring ways to build the resilience of the most vulnerable people against natural hazards.
Adapting to an evolving environment
The people I have met in the dry corridor of Guatemala and in the northwest near the Mexican border have taught me so much—about biodiversity and respect for the environment, but also about resilience in the face of adversity.
I vividly remember a group discussion where we asked participants about their biggest fears. The response was unanimous: loss of biodiversity and a threat their own survival due to climate change. They told us how things have changed over the years and brought us to an area where a river used to flow and where their ancestors used to thank the river for a good season. The river now runs dry.
Despite their predicaments, with tempered optimism, the communities I met shared ideas and the steps they have taken to adapt to their new reality and to mitigate the negative impacts of climate change and be able to secure a brighter future. These include using ancestral methods to forecast weather changes (like changes in animal behaviour), adopting ancestral agroforestry practices, creating community-based organizations to finance preparedness measures, keeping emergency funds in case of disaster, and receiving support from family and friends through remittances and other types of transfers. More drastic measures included migrating to countries like the US.
Insurance is integral
However, in order to cope with catastrophic droughts, excess rainfall, or floods, there is an urgent need for comprehensive risk management and risk financing tools, such as insurance.
Guatemala has taken important steps to develop a portfolio of such tools. Since 2016, index insurance products have been available to manage disasters. In 2018, Guatemala adopted a Disaster Risk Financing Strategy and the following year the country joined the Caribbean Catastrophe Risk Insurance Facility (CCRIF).
In 2021, with support from IFAD, the World Food Programme (WFP) partnered with the Microinsurance Catastrophe Risk Organisation (MiCRO) and a local insurer, Aseguradora Rural, to offer a micro-insurance product providing protection against drought and excess rain to smallholder farmers and small and micro-entrepreneurs who typically cannot access credit.
INSURED promotes the use of agricultural insurance to build resilience and strengthen livelihoods. Financed by the Swedish International Development Cooperation Agency and implemented by IFAD through the Platform for Agricultural Risk Management, INSURED has been supporting WFP Guatemala to expand its microinsurance scheme. In 2022, the scheme protected over 9,000 people, of whom more than 80 per cent are women and nearly 30 per cent are members of indigenous communities.
This work is part of an IFAD-funded Home-Grown School Feeding programme, jointly implemented with FAO and WFP, which aims to integrate small-scale producers into the school meals value chain, therefore giving them access to a stable market and income stream.
A customer-centred design, testing innovative distribution and business models, and the unyielding commitment of stakeholders have been key factors in the initial success of this microinsurance product.
Preparing for an uncertain future
Looking ahead, INSURED is supporting WFP Guatemala to develop the first Forecast Index Insurance product in Central America. This product will provide payouts based on forecasts, so communities have the funds to take actions that reduce the impact of dry spells before they happen.
This is just the beginning of a long journey and insurance is just one component of an integrated risk management approach. But with sustainability at the core of the discussion, I am certain Guatemalans will be better able to manage risks so they can secure a brighter future for generations to come.
Read more about WFP’s micro-insurance product.
Andrea Camargo is a lawyer specializing in Insurance Law who has been working as a risk financing expert with INSURED since 2019.