The government of Andrés Manuel López Obrador renewed, once again, the catastrophic insurance for the following year, which is one of the shields of public finances and aims to deal with eventualities that harm the population, especially those with fewer resources.
In the General Criteria for Economic Policy (CGPE) for 2023, the Ministry of Finance and Public Credit (SHCP) states that the catastrophic insurance will have a coverage of 5,000 million pesos valid from July 5 of this year to December 5. July 2023.
The details provided by the Treasury is that this coverage has an operational deductible for adjusted damage diagnosis of 275 million pesos and an annual aggregate deductible of 750 million pesos.
In addition, there is still a catastrophic bonus for an amount of 485 million dollars against losses derived from earthquakes and tropical cyclones, valid until March 2024.
“Mexico has experience and a solid institutional structure in terms of risk transfer to both national and foreign specialized markets. Public finances in the 2023 financial year will have a robust protection strategy in terms of catastrophic risks: the Insurance to deal with damage caused by natural phenomena (Catastrophe Insurance) and the Catastrophic Bonus”, explained the agency.
In 2006, Fonden issued the first catastrophic bond, which was designed by the Ministry of Finance with the support of the World Bank.
Mexico is a country in which year after year various accidents caused by nature occur. Although this is common, both the insurance and the catastrophic bonus are not activated in each event, since they have specific operating rules, where the disaster must meet certain requirements to be activated.
For example, the activation of the catastrophic bonus could be done through a disaster declaration if an earthquake occurred that met a certain level of criteria: magnitude, intensity and an epicenter located in specific zones.
Various schemes and strategies are analyzed to strengthen coverage in terms of risk transfer, as well as to minimize the impact on public finances in the face of catastrophic events. By 2023, it is planned to update the catastrophic risk analysis and modeling instruments for the strengthening of the Comprehensive Disaster Risk Management. To do this, we will work with international organizations, governments of other countries and actors from the national and international insurance sector in the preparation of studies, projects and public policies to make national risk analysis instruments more efficient,” said the SHCP.
Resources for disasters increase
Although the Natural Disaster Fund (Fonden) was eliminated in 2021, the government still budgets resources for the states in case of an emergency such as floods, storms, or earthquakes.
The Federation Expenditure Budget Project (PPEF) for the following year contemplates in Branch 23 of Salary and Economic Provisions, an expense of 17,156 million pesos for said disasters.
This represents a significant growth of 80.4% compared to what was approved for this year.
Vulnerable
Even with instruments such as insurance and the catastrophic bond, together with the resources budgeted for natural disasters, Jorge Cano, a researcher at México Evalúa, indicated that the country is still vulnerable.
The foregoing, he pointed out, is due in the first place to the fact that the instruments contracted by the government are not always activated, while the budgeted ones are transferred to other dependencies.
“The problem is that we no longer have the Fonden, so we have to resort to budget expenses. This year, with an expense of around 9,000 million pesos for natural disasters, what we see in the first semester is that they have not been fully executed. In fact, the resources from that item have been transferred to other ministries so that they carry out programs to deal with natural disasters”, he added.
Less than 7% of houses have insurance
According to data from the Mexican Association of Insurance Institutions (AMIS), less than 7% of all homes in the country have insurance, a fact that was reflected in 2017, with the earthquake of September 19 in where only some households had this protection.
“The number of insured risks in the housing sector is 7.8 million, however, of this number just under 7% have voluntary insurance, the rest is linked to a mortgage loan,” he said.
ana.martinez@eleconomista.mx
[ad_2]
hartford car insurance shop car insurance best car insurance quotes best online car insurance get auto insurance quotes auto insurance quotes most affordable car insurance car insurance providers car insurance best deals best insurance quotes get car insurance online best comprehensive car insurance best cheap auto insurance auto policy switching car insurance car insurance quotes auto insurance best affordable car insurance online auto insurance quotes az auto insurance commercial auto insurance instant car insurance buy car insurance online best auto insurance companies best car insurance policy best auto insurance vehicle insurance quotes aaa insurance quote auto and home insurance quotes car insurance search best and cheapest car insurance best price car insurance best vehicle insurance aaa car insurance quote find cheap car insurance new car insurance quote auto insurance companies get car insurance quotes best cheap car insurance car insurance policy online new car insurance policy get car insurance car insurance company best cheap insurance car insurance online quote car insurance finder comprehensive insurance quote car insurance quotes near me get insurance