Peru is exposed to a variety of natural hazards, including earthquakes, tsunamis and heavy rains that lead to devastating floods and landslides. The 2017 El Niño Costero flooding in Peru was highly destructive with catastrophic effects for the country and its public infrastructure. Yet a low insurance distribution in the country left people vulnerable, with little financial protection. As a consequence significant investment was required from the government to address the aftermath. Damaged as a result of El Niño Costero, more than 1,000 public schools will only be rebuilt three years later. Administrative hurdles and limited capacities represent major obstacles for the swift reconstruction and repair of public infrastructure. With an innovative insurance approach and more efficient loss assessment, a faster reconstruction process and resumption of schooling will be enabled through a new project promoted by Peruvian Association of Insurance Companies (APESEG), co-funded by the InsuResilience Solutions Fund (ISF*) and a project consortium formed by the Insurance Development Forum (IDF*).
To strengthen the resilience of the portfolio of more than 50,000 public schools in Peru to natural disaster risks, the Frankfurt School, as implementing agency of the ISF, today signed a grant funding agreement with the IDF project consortium partners. Led by AXA XL and Munich Re, it includes APESEG as a critical local partner. To substantiate the political, technical and legal feasibility of the insurance approach, the ISF co-financed a respective feasibility study last year. The new national insurance programme for public schools against natural hazards will be jointly designed by the re/insurance companies AXA XL and Munich Re as well as the catastrophic risk modellers GEM Foundation and JBA Risk Management, including input from the local insurance companies.
As part of this project for the Peruvian government, the insurance programme serves as a catalyst for comprehensive risk management. Ex-ante formulated financing and reconstruction procurement processes for public schools are intended to enable a faster start of reconstruction and help to improve school building standards in the long term. The use of innovative image recognition technologies, offered by the InsurTech Picsure enables a faster documentation and value assessment of assets to be insured and more cost-efficient assessment of claims.
As a result, the resilience of public schools in Peru against major climate and natural disaster risks will be enhanced and pupils and school staff throughout the country may indirectly benefit from improved and secure school buildings and a faster resumption of schooling, minimizing education interruption.
*The ISF was set up and is funded by KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). It is a key delivery channel for the InsuResilience Global Partnership, a joint initiative by the G20 and V20 countries to reduce vulnerability. The ISF supports innovative insurance solutions to mitigate negative impacts of climate change. It offers co-funding and advice for the implementation of new climate risk insurance concepts into marketable products and to expand sustainable existing products.
*The IDF is a public-private partnership led by the re/insurance industry and supported by international organisations. The IDF was first announced at the United Nations Conference of the Parties (COP21) Paris Climate summit in 2015 and was officially launched by leaders of the United Nations, the World Bank and the insurance industry in 2016. The IDF aims to optimise and extend the use of insurance and its related risk management capabilities to build greater resilience and protection for people, communities, businesses, and public institutions that are vulnerable to disasters and their associated economic shocks. www.insdevforum.org Please find the IDF Practical Guide to Insuring Public Assets here