Mitigating Earthquake Risk in Mexico Through Microinsurance

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The SIPA workshop team conducted market research to identify and quantify the gap in climate and catastrophe insurance among the low-income population in Mexico. Through conversations with government officials, insurers, reinsurers, brokers, and civil society organizations, the team conducted qualitative research to analyze the supply side of the insurance market. Over the course of our field research in March 2018, they completed 220 surveys to analyze the demand side. Our research led them to find that there is demand for an earthquake insurance among the low-income population in Mexico. The team recommended that an earthquake insurance product in Mexico be an index insurance bundled with another financial product or service such as a loan, electricity bill, or property taxes. The coverage would be a direct cash transfer, which could help cover damages to the building or a loss of income. The insurance would be the result of a public-private partnership (PPP). As additional risk mitigating strategies, the team also recommended a voluntary structural safety certification program for buildings and educational programs to enhance the financial literacy of the Mexican citizens.