The Dominican Republic has become the first country in Latin America and the Caribbean to incorporate parametric insurance into its social protection system. The announcement came in a joint statement from the Insurance Development Forum (IDF) and the United Nations Development Programme (UNDP). Germany's Federal Ministry for Economic Cooperation and Development, known as BMZ, also joined the statement.
The policy is designed to provide financial support to households after extreme rainfall or wind events. The coverage was developed under a tripartite agreement among the three organizations and was financed in part through the InsuResilience Solutions Fund (ISF).
The program initially covers 3,030 households enrolled in the Supérate conditional cash transfer program in Santo Domingo Norte and Puerto Plata. Supérate is the Dominican Republic's national cash transfer program for low-income families.
That figure is small against the scale of the broader problem. Fitch Ratings found that only around 50 million people were covered by natural catastrophe microinsurance products across 37 countries in 2024. That represents less than 2% of the target population.
The same analysis put the global protection gap for such losses above 60% by the end of 2025.
The policy uses a parametric structure that triggers payouts automatically once rainfall or wind speeds cross predefined thresholds. Payments are based on satellite and meteorological data rather than post-disaster damage assessments.
Reinsurance specialists have pointed to that speed as the main advantage of parametric structures in developing countries. Traditional insurance penetration in those markets often lags behind economic growth. A Gallagher Re executive has said parametric triggers remove the lengthy damage assessment process associated with indemnity claims.
That structure lets policyholders receive funds within days or weeks rather than months.
Regional catastrophe pools have used similar triggers for more than a decade. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is the largest such program and covers Caribbean governments. CCRIF paid Jamaica US$70.8 million within days of Hurricane Melissa, its largest claim to date.
The Dominican Republic's program applies the same logic at the household level rather than to a national government's balance sheet.
Mayra Jiménez, director general of the Dirección de Desarrollo Social Supérate (DDSS), presented the program at an event in Santo Domingo. Supérate hosted the event on June 9. "This insurance provides an additional layer of protection for households that are most exposed to the impacts of climate-related events," Jiménez said.
The policy was activated June 15 and was formally announced at the Hamburg Sustainability Conference. Ivana Živković, a UN assistant secretary-general at UNDP, spoke at the conference about the initiative. She said the program combines insurance, financial protection, and social inclusion to help vulnerable households recover from climate shocks.
Similar models have emerged elsewhere. In the Pacific, Tuvalu has built a parametric insurance scheme tied to sea-level triggers directly into its social protection delivery systems. UNDP is among the partners involved.
Households there receive automatic payments when tide levels cross predefined thresholds, a design similar to the one now in place in the Dominican Republic.
The insurance product was designed by an IDF-led consortium that includes Guy Carpenter Mexico, AXA Climate, Blue Marble, CelsiusPro, and the local insurer Seguros Reservas. The consortium members and the ISF co-financed the program.
