Project profile — Catastrophe Risk Insurance Facility for Central America - Nicaragua

The Catastrophe Risk Insurance Facility for Central America (CRIFCA) provides natural disaster risk insurance coverage for Central American countries - this project focuses on Nicaragua. Central America is highly vulnerable to natural disasters, such as earthquakes, hurricanes, and excess rainfall. Natural disasters typically disrupt economies, threaten the ability of a country to maintain essential services such as education, health and security, and jeopardize timely debt repayments. Natural disaster risk insurance is an essential tool to minimise the impact of natural disasters on a country's economy. The insurance provides countries with access to immediate financial payouts that are key to recovery and reconstruction efforts and that lessen the impact on ongoing poverty reduction efforts and the hard-won development gains of Central American countries. The project builds on the Caribbean Catastrophe Risk Insurance Facility (CCRIF), a multi-country, pooled disaster risk insurance facility established by the World Bank with the support of Canada and other donors in 2007. The Catastrophe Risk Insurance Facility for Central America project provides disaster risk insurance coverage to the seven member countries of the Council of Ministers of Finance of Central America (COSEFIN): Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic at the request of their governments. Canada’s funds, provided through the World Bank, support the capitalization of the insurance pool for Central American countries. The funds also provide technical assistance to help Nicaragua develop disaster risk management strategies and, when necessary, pay Nicaragua’s initial entry fees and premiums.

The expected outcomes for this project include: (i) earthquake and hurricane/cyclone insurance products for Council of Ministers of Finance of Central America (COSEFIN) countries (in particular Nicaragua) sustainably established as part of the existing Caribbean Catastrophe Risk Insurance Facility; (ii) Nicaragua has access to affordable excess rainfall insurance; and (iii) improved capacity of COSEFIN countries (in particular, Nicaragua) to respond to and recover from natural disasters, allowing them to better address the needs of affected populations and environments.

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