{"id":13408,"date":"2017-11-16T16:47:18","date_gmt":"2017-11-16T15:47:18","guid":{"rendered":"http:\/\/www.fundacionmicrofinanzasbbva.org\/en\/?p=13408"},"modified":"2017-11-27T13:25:08","modified_gmt":"2017-11-27T12:25:08","slug":"how-microinsurance-can-provide-macro-support","status":"publish","type":"post","link":"https:\/\/www.fundacionmicrofinanzasbbva.org\/en\/how-microinsurance-can-provide-macro-support\/","title":{"rendered":"How microinsurance can provide “macro” support"},"content":{"rendered":"

Life, routine, and productive activities were stopped in order to respond to the crisis situation caused by the Coastal El Ni\u00f1o Phenomenon (known in Spanish as FENC). The FENC is a natural occurrence that started during the latter part of November last year<\/strong>, and which destroyed the lives of 158 people, aside from eliciting damages in infrastructure facilities, housing, business, agriculture and livestock, valued over billions of euros.<\/p>\n

Everyone did their part to help in the rescue and search tasks, as well as in relocation needs of the survivors. However, following the initial shock, the Peruvian society was suddenly faced with a devastating new reality.<\/p>\n\"\"\n

Unfortunately, many people had to start leading their lives from scratch, namely Karina Ferrer (Chimbote), Mar\u00eda Broncano (Huarmey) and Rosa Poma (Huarmey). They are female entrepreneurs of Financiera Confianza (FC)<\/a>, the BBVA Microfinance Foundation<\/a>\u2019s entity in Peru. From one day to the next, they witnessed how the floods and mudslide dismantled their businesses in \u00c1ncash, one of the most affected departments of the El Ni\u00f1o phenomenon, and where 60% of unemployment was registered after the event.<\/strong><\/p>\n

[image_text_hover imagen=”http:\/\/www.fundacionmicrofinanzasbbva.org\/wp-content\/uploads\/2017\/11\/Captura-Ancash.png” texto=”<\/p>\n

[image_text_hover imagen=”http:\/\/www.fundacionmicrofinanzasbbva.org\/wp-content\/uploads\/2017\/11\/Captura-Ancash.png” texto=”
\n&quotBefore the El Ni\u00f1o<\/em>, business was doing good, we were working well. After the huaico<\/em> we were left without our store, it was horrible. <\/strong>All of the shops around here closed, and we found ourselves climbing the mountains to find refuge where we built a home and stayed for almost two months.&quot<\/strong>– Karina Ferrer<\/strong>“][\/image_text_hover]<\/p>\n

Meanwhile, in Colombia, people are living a similar reality. More than 2,000 km north of Per\u00fa, the residents of Mocoa (Department of Putumayo) continue reconstructing their lives at the advent of an avalanche that wiped the city out in April\u00a0this year and headlined all news outlets worldwide.<\/strong> The heavy rains that caused rivers to overflow- floodings and mudslides swept everything in their way, from houses, to bridges, trees and vehicles. 40% of the city was ravaged, leaving a total of 320 dead and hundreds missing.<\/p>\n

Even though the reconstruction efforts started in May, many inhabitants still live distressed. They are aware that aside from having to rebuild housed and reactivate basic services (water and electricity), they are faced with the survivors\u2019 lack of jobs.<\/strong> This is a big challenge, given the discouraging scenario left behind, where practically all the small businesses in Mocoa were affected: 41% of them reported total damages in their commercial premises, while 59% suffered partial damages.<\/strong><\/p>\n\"\"\n

One example is Nancy Marcela Encarnaci\u00f3n, a client of Bancam\u00eda<\/a>, the Foundation\u2019s entity in Colombia. The night of the disaster, she was in the second floor of the building where her beverage distribution shop is located. When she woke up, she found everything was covered with mud and all the merchandise worth 4.7 million pesos (around 1,300 euros) was wasted. Just like her, Walter Vergara also had to rebuild his bullhorn advertising service when he saw that his storage unit was totally wrecked, along with his equipment and vehicles. On his part, Alirio de Jes\u00fas saw how the waters flooded his warehouse containing repair and replacement materials, as well as motorbikes and he was not able to salvage anything.<\/p>\n

The path to reconstruction is lengthy but promising<\/strong><\/p>\n

For Peru, it was estimated that the reconstruction costs which would be equivalent to 4% of the country\u2019s GDP, will help boost its 2.2% predicted growth.<\/a> In Colombia, 330,000 million pesos (94.5 million euros) will be destined to build 1,200 new houses, a hospital an aqueduct and an electric plant, among others. These efforts are expected to regenerate employment and reestablish lives. However, experts agree that in all reconstruction processes, the biggest determinant to achieving the targets lies on the survivors\u2019 willingness and capacity for action.<\/strong><\/p>\n

Karina, Mar\u00eda, Rosa, Walter, Nancy and Alirio are perfect examples, who, like the other survivors, bear a strong will to move on. Like other entrepreneurs served by the BBVAMF, they possess a tool that has helped them during tough moments like these: microinsurance<\/strong>– a product focused on the needs of vulnerable people who rely on their productive activities as livelihood. Microinsurance has given them greater response capacity. According to clients, the microinsurance they\u2019ve acquired made it easy for them to rise again<\/strong>: it has made it possible for them to pay loans and has assisted them in replacing their capital and other materials to rebuild their businesses.<\/p>\n

\u201cI used the money to pay bills because after the avalanche, we had to close down for 20 days and we didn\u2019t make any sale, nobody came, I remained more than a month and a half away from here\u2026 there was an epidemic threat. The money I received helped me pay some loans I acquired, aside from the bills\u201d, shared Alirio, adding that the compensation amounts were \u201ca great support for my business, for my solvency.\u201d<\/p>\n\"\"\n

In the face of adversities like FENC or the Mocoa tragedy, the vulnerable population\u2019s economic insecurity is manifested through the greater effect that an unforeseen shock brings upon them.<\/strong> That is to say, aside from the lack of resources to protect themselves from the unexpected, they also possess insufficient response mechanisms.<\/p>\n

Solutions coming from the local and national governments, although necessary, most of the times are not enough, or they don\u2019t arrive fast enough<\/a> to repair damaged lives. Because of this, taking microinsurance is a viable and recommendable alternative to be able to respond to these situations.\u00a0 Microinsurance gives disaster survivors a chance to make themselves part of the reconstruction process, empowering them and reassuring that they take ownership of the future they wish to outline.<\/strong><\/p>\n