The Caribbean Catastrophe Risk Insurance Facility (CCRIF) announced that eight of its members have become the first countries to purchase its excess rainfall insurance coverage – for the 2014/2015 policy year.
CCRIF developed the program in conjunction with Swiss Re. It said the “excess rainfall product is aimed primarily at extreme high rainfall events of short duration (a few hours to a few days), whether they happen during a tropical cyclone (hurricane) or not.
“Like CCRIF’s tropical cyclone and earthquake insurance, the excess rainfall product is parametric and estimates the impacts of heavy rain using satellite rainfall data from the Tropical Rainfall Measurement Mission (TRMM) and exposure from CCRIF’s risk estimation database. Because the excess rainfall product is parametric, a payout can be made quickly (within 14 days) after a rain event that triggers a country’s policy, without waiting for time-consuming damage and loss assessments on the ground.”
CCRIF CEO Isaac Anthony commented: “The new excess rainfall product has been eagerly awaited by Caribbean governments as we all realize that considerable damage in the region is caused by rainfall and flooding. This product complements CCRIF’s hurricane coverage which determines losses based on wind and storm surge. We commend our eight members for taking the initiative and purchasing this ground-breaking product and hope that other countries in the region will follow.”
Martyn Parker, the Chairman of Swiss Re’s Global Partnerships, explained: “Securing excess rainfall insurance protection demonstrates that Caribbean countries are taking a proactive approach to manage the contingent risks posed by climate change. Swiss Re is proud to support them in their efforts to ensure fiscal stability after a disaster.”
The CCRIF noted that the countries electing the coverage would “ now be able to respond better to an event such as the trough that brought heavy rains to the Eastern Caribbean in December last year, which resulted in loss of life, extensive damage to infrastructure and wide-spread economic disruption. The excess rainfall product is independent of the tropical cyclone product and if both policies are triggered by an event then both payouts are due.
“Taking into consideration the fiscal challenges that many of our members face and their increasing levels of vulnerability, CCRIF continues to work towards reducing the overall premium cost to members.”
For the 2014-2015 policy years CCRIF said it “offered two one-off premium discount options due to a third successive year in which none of the policies held by member countries were triggered by an event. The two discount options were: a 25 percent discount on tropical cyclone and earthquake policy premium if no excess rainfall policy is purchased; and up to a 50 percent discount if applied to an excess rainfall policy.
“Also, as done previously, for 2014/2015 policies, CCRIF allowed 50 percent of the total premium to be held as paid-in Participation Fee (the one-time fee paid when a country joins the Facility), with the excess therefore being available to co-fund premium, providing an opportunity to further reduce current expenditure on policy premiums. Additionally, countries which have not already done so can exercise the option to reduce their attachment point to a 10-year return period for tropical cyclones. This would result in coverage being secured for events that occur more frequently than was previously available.”
Source: Caribbean Catastrophe Risk Insurance Facility (CCRIF)