Honduras is one of the poorest and most unequal countries in Latin America and the Caribbean, with nearly half of its population living on less than USD 6.85 per day as of 2019. The country is also classified as high climate risk country, being affected by several natural hazards. A large number of low-income families work in the manufacturing industry (maquila). This industry plays, therefore, a crucial role in the country’s economy, contributing 21.5% to the Gross Value Added in 2022 and employing 472,989 people in 2023. However, the sector is highly vulnerable to climate-related disasters. Hurricanes Eta and Iota caused severe operational disruptions, job losses, and economic instability for both companies and workers. Women, who make up 48% of the workforce in this sector but earn 42% less than men, were particularly affected.
To strengthen financial resilience in the sector, the InsuResilience Solutions Fund (ISF) is co-funding the development and implementation of a new parametric insurance solution in collaboration with a consortium led by Europa Re, alongside ImageCat and the Permanent Contingency Commission of Honduras (COPECO).
Europa Re is responsible for product development, risk-taking, project management, and establishing local insurance or derivative structures. ImageCat will support hazard assessment, risk modeling, and awareness-building efforts. COPECO will support the marketing, capacity building and awareness campaign. The initiative focuses on the North Region, particularly the Sula Valley, which serves as Honduras’ primary industrial hub, home to 81.6% of the national maquila industry workforce and employing 132,785 workers.
The project aims to introduce a parametric insurance product designed to provide rapid financial relief to vulnerable manufacturing workers affected by hurricanes and flooding. By ensuring timely payouts during business disruptions, this innovative solution will help workers sustain themselves and their families during recovery periods.
By enhancing financial resilience and mitigating the economic impact of natural disasters, this initiative marks a significant step forward in disaster preparedness and response in Honduras. Through collaboration between the private manufacturing industry, government, financial institutions, and disaster risk specialists from the insurance industry, the project seeks to establish a reliable safety net for one of the country’s most vulnerable labour forces while promoting long-term climate resilience.
