What Colombia’s Earthquake Really Taught the 90% Who Had No Insurance

As a finance professional, I’ve spent nearly two decades studying risk across balance sheets — I’ve watched how an asset nobody wants today becomes the one everybody needs tomorrow, and back again. That habit has left me with a tic: when something big happens, my first question is “what happened?” My second is “was there coverage for the risk that just hit?” Colombia’s devastating August 10 earthquake gave me a far more uncomfortable answer: more than 90% of homes in the country carried no earthquake insurance — including in the hardest-hit departments, Valle del Cauca, Risaralda, Quindío, Caldas and Chocó. Fasecolda’s president put it plainly: “only a fraction of the population has access to formal financial protection against catastrophic risk.” That line should bother you as much as it bothered me, because it’s a reality that won’t change easily: in Versalles, in northern Valle del Cauca, more than 700 homes were destroyed and aid is arriving “a trickle at a time, given how hard the roads are to reach” — rural areas where insurance isn’t yet a realistic option. Risk coverage for something like this still has a limited real-world reach in Colombia — which doesn’t make it any less worth taking seriously.

What actually worked

Credit where it’s due — it worked fast. Bancolombia, Davivienda, Grupo Aval and GNB Sudameris cut mortgage rates for earthquake victims from 14% to 8% effective annual — 600 basis points, more than 30% off the monthly payment, locked for the life of the loan. That’s real relief, not a press release, for over 175,000 damaged homes. If you qualify, that’s financing at a cost you won’t normally see outside a crisis — exactly when you need it most.

What nobody’s telling you

That 8% loan solves today’s liquidity problem, not tomorrow’s exposure problem. Rebuild with subsidized debt and stay uninsured against seismic risk, and the next emergency — in a country sitting on the Ring of Fire, there will be a next one — leaves you dependent again on the state bailing you out with emergency credit and assets seized from narco-trafficking, which is exactly how the government is funding a chunk of the $30 trillion pesos reconstruction needs right now. That’s not financial protection for you: the insurance bundled into your mortgage protects the bank’s collateral, not your equity. It’s betting, every time, that help arrives on schedule and that the treasury can afford it. With external debt at 52.7% of GDP and a government barely three weeks into trying to bring the deficit down, that bet gets more expensive for everyone — not just for whoever lost the house. Today’s Daily Briefing digs into that same fiscal tension, with the Colombian peso at its strongest since 2018.

The real opportunity

It’s for anyone reading this from a house that’s still standing. If your home or business carries no seismic coverage, this is the moment — not six months from now, once the memory of the quake has cooled and insurance goes back to being a line item nobody checks. The cost of a catastrophic policy today, next to the cost of rebuilding without one, isn’t remotely comparable. And if you’re telling yourself “that won’t happen to me,” 175,397 families were probably telling themselves the same thing a month ago.

This is, at bottom, a problem of judgment and culture — not information. Everyone knew, in the abstract, that Colombia sits on fault lines, and the information on how to cover that risk was always there. What’s usually missing is the decision — it’s not easy to pay today for a risk that feels distant and random, even knowing that not deciding is also a decision, and usually the most expensive one. That’s the question I’ll leave you with — not as a finance professional or an academic, but as someone who has watched enough badly-hedged risks blow up: are you willing to insure against something uncertain and random that could happen to you, whether you believe it or not — or are you betting on the state, or on luck, to bail you out when it does?

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