Government of Mexico's Disaster Risk Management Strategy

March 8, 2013 8:35 AM

I know this is a long shot, but does anyone have information on how the Government of Mexico was able to convince it's citizens that investing in disaster risk management (DRM) insurance/cat bond schemes was worthy of their tax money?

Mexico is vulnerable to a number of catastrophic natural disasters, namely earthquakes. As part of their long-term strategy, the government decided to invest in insurance schemes and cat bonds to that payout if the natural disaster event were severe enough. Assessments of the merits of these investments aside, does anyone have information as to how (or if!?) if the Government of Mexico (GoM) was able to convince its taxpayers that premiums are a worthy use of money? I work on a DRM/weather insurance project at the UN, and I am trying to get a better understanding of what (if any) media campaigns were used to promote the idea of long-term DRM strategies, as opposed to reactionary approach. I know this is a long-shot, but any leads or contacts would be much appreciated!

posted by msk1985 to Law & Government (2 answers total)

Wouldn't you sell the Cat Bonds if you were Mexico? So then it just feels like government debt? Why would you have to sell this to the public? In the US we don't have to sell people on government subsidized flood insurance. Is there something I'm missing here?

The only thing that makes the Cat bond angle interesting is that Mexico chose to reinsure the risk via essentially a securitization.

It would seem like you would want to research the history of (or chat with) FONDEN - the entity that issues the CAT bonds and runs the disaster mitigation programs.
posted by JPD at 9:16 AM on March 8, 2013

Here is a decent article on the topic (PDF)
posted by JPD at 9:19 AM on March 8, 2013