25 Feb Colombia – Reduction in Fiscal Risk by Insuring 40 Billion Dollars Road Infrastructure under Concession
Colombia has the highest rate of
recurrent disasters due to natural phenomenon in Latin
America with more than 600 disasters per year. The heavy
rainfall during the 2010-11 La Niña season caused
generalized losses across Colombia. Losses to the transport
infrastructure sector totaled approximately US1.7 billion
dollars, placing additional financial burden on the
Government of Colombia. In 2012 the Ministry of Finance and
Public Credit (MoF) requested technical assistance from the
World Bank (WB) to improve the catastrophic insurance
requirements for the protection of public investment. The WB
delivered to the Government of the country technical
guidelines for the road infrastructure insurance based on
the best practices in the international markets and adapted
to the national context. The National Concession
Infrastructure Agency (ANI) corresponds to the acronyms in
Spanish of Agencia Nacional de Infraestructura developed
three insurance policies with tailor-made clauses for
Colombia, considering the technical guidelines generated by
the WB, the best international market standards and the
national practice. These insurance policies were the result
from the joint effort between public sector entities and
private sector companies. The roads built through
Public-Private Partnerships (PPPs) for the fourth generation
of concessions (4G) have been insured for more than US 40
billion dollars through improved insurance policy contracts.
This high-quality insurance has allowed the reduction of the
government’s fiscal exposure by transferring this risk to
the local and international insurance and reinsurance
markets. This is an example of how, to effectively reduce
the country disasters contingent liability a coordinate work
between the State and the national and international private
sector is necessary. Appropriate insurance reduces, in case
of a disaster, the need for the State to increase debt, and
or taxes, or divert budget resources that were destined,
before the disaster, to meet the country economic and social
development objectives.