Design and Implementation of a Collective Risk Transfer Instrument for the Insurance of Low-income Homeowners

摘要

This paper discusses how a catastrophe risk model-based on metrics such as the Probabilistic Maximum Loss and the Average Annual Loss-has been used to estimate, building by building, the probabilistic losses of different portfolios of exposed elements. It also explains how a risk transfer instrument for the coverage of the private housing in two cities of Colombia (Manizales and Bogota) was designed, promoting the insurance culture and covering the low-income homeowners through a cross-subsidy strategy. This instrument is a voluntary collective insurance promoted by the city administration and the insurance industry, using the mechanism of the estate-tax payment. The program provides the financial protection not only of the estate-tax payers but also of the low-income homeowners that cannot pay the tax due to their income limitations. This collective insurance helps the government to access key resources for the low-income householder recovery and improve disaster risk management at local level.