Insurance protection is becoming easier for all Jamaicans, says the Development Bank of Jamaica (DBJ).

The DBJ said in a press release that it has partnered with the Project Team of representatives from the Munich Climate Insurance Initiative (MCII), the Caribbean Catastrophe Risk Insurance Facility (CCRIF), MicroEnsure and Munich Re in another step towards developing a Livelihood Protection Policy for low-income earners and a Loan Portfolio Cover insurance policy for lenders to the Micro, Small and Medium Sized (MSME) Enterprise sector.

The DBJ noted that in November it hosted the second in a series of workshops on ‘Climate Risk Adaptation and Insurance in the Caribbean’ to collect additional data to prepare product design and create policies to aid low income households, particularly vulnerable farmers, in reducing or avoiding loss and damage from extreme weather events such as heavy rains and winds, floods and hurricanes.

Presenters at the seminar included representatives from MicroEnsure, the world largest microinsurance brokers, the MCII, CCRIF, and Munich Re. They highlighted that low-income communities face daunting challenges in managing weather-related risks, and farmers and day labourers are among the first to be affected by bad weather, the DJ said.

” Very few of these persons have sufficient weather information to inform their farming and investment decisions or have access to financial back-up mechanisms for hard times. In addition, few have adequate resources to apply other risk management strategies (use of savings, sale of assets, credit and so on) to manage disaster risk, translating into a negative cycle of poverty,” stated the release.

The Livelihood Protection Policy (LPP) is one method of breaking this negative cycle by providing individuals with an amount of money within a short period of time after an extreme weather event so that they can quickly start rebuilding their lives, said the DBJ. The agency reported that, in leading the discussion on the benefits of the LPP, Dieter Broesche, the representative of reinsurer Munich Re, pointed out that this was not insurance coverage for life or property but instead one’s livelihood.

“So, for example, a small farmer would be able to take coverage for his farming activities and, after a weather-related event with windspeed at — for example — 100 or more miles per hour occurred, would receive a financial payout. Because it is aimed at the low-income sector, premiums would be at a level that is affordable to the farmer,” highlighted the DBJ, noting that the LPP would be offered in fixed blocks of coverage — for example, $100 — but purchasers would be able to adjust coverage to their individual needs by buying more than one policy.

What’s more is that an important feature of the LPP is an SMS-based warning and claims notification system that advises policy holders about upcoming weather events by their cell phones, noted the DBJ. This, the agency said, would allow people to react in time to secure their assets, leading to a reduction in losses. Should the trigger level be reached then a message would let policy holders know.

In so far as distributors (such as banks, credit unions, cooperatives and other such entities which lend to the rural and low-income sector) of the LPP are concerned, Broesche reportedly spoke about the Loan Portfolio Cover (LPC), a trigger-based insurance policy which would provide portfolio level protection against loan default for lender institutions which have significant portfolios of individual and MSME loans exposed to weather risks.

“This policy will enable the institutions to restructure or write off defaulted loans of their clients,” said the release.

Juliet Kyokunda of MicroEnsure added that under the LPC, if the weather-related damage was complete, leading to a default in loan payments, the possibility existed for a write-off enabling people to get “fresh money” to rebuild their livelihoods and avoid falling into poverty, added the release.