An overview of how CEI programs can be structured and why they exist
An insurance program arranged by a local municipality or community org., covering individuals to enhance individual and the collective financial resilience of the community. Similar to the way employers structure benefits plans.
Design of an optimal CEI programs requires thorough & transparent accounting for the Total Cost of Risk
Key features of community embedded insurance
- Group purchasing: A local government entity (city, county, etc.) or community organization secures coverage for multiple properties simultaneously, creating economies of scale and leveraging of collective purchasing power to influence insurance market affordability and accessibility.
-
-
Group catastrophe insurance can be purchased and offered by an employer, a social benefit organization, a government agency such as a municipality or regional resilience district, a home owners association and .
-
-
- Individuals cannot purchase group coverage directly; they must be part of a group to be eligible. Group eligibility could be based on location, residency and/or other factors such as participation in risk reduction efforts more broadly.
- Gap Protection: These programs often address protection gaps where traditional insurance is unavailable, unaffordable, or insufficient.
- Resilience Focus: Community embedded programs typically integrate with broader disaster preparedness and mitigation strategies and attempt to capture the risk reducing value of other investments by
- Parametric Triggers: Many programs use parametric insurance designs that pay out when predefined conditions are met (e.g., wind speed exceeding a certain threshold, earthquake of a certain magnitude), rather than requiring individual loss adjustment. Pprograms can be designed to simplify claims payment process during disaster when administrative capacity is strained and the need for rapid infusion of capital into the impacted community is crucial.