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Cayman Islands-based CCRIF (formerly the Caribbean Catastrophe Risk Insurance Facility) will make payments totaling US$29.6 million to six Caribbean nations recovering from Hurricane Irma.
CCRIF’s parametric tropical cyclone insurance policies will pay $6.8 million to Antigua & Barbuda; $6.5 million to Anguilla; $2.3 million to St. Kitts & Nevis; $13.6 million to Turks & Caicos Islands; $162,000 to Haiti, and $234,000 to The Bahamas.
Payments will be received by the countries within 14 days of the event as mandated by CCRIF’s guidelines.
CCRIF limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered.
CCRIF said it will continue to assess if any excess rainfall (XSR) policies of its member countries were triggered by the rains from Hurricane Irma. As a result, countries may receive a second payment under their XSR policies. The assessment for XSR policies takes a few days longer than the assessment for TC policies, which are based on wind and storm surge.
CCRIF said the TC policies for Haiti and The Bahamas were not triggered by Irma. However, the payments that are due to both countries are based on CCRIF’s Aggregate Deductible Cover (ADC), which was introduced at the start of this policy year as a new policy feature for its members.
“The ADC represents a means by which CCRIF can help its members when modeled losses fall below the attachment point but where there are observed losses on the ground,” said CCRIF, which is a segregated portfolio company.
CCRIF’s parametric insurance policies for earthquakes, hurricanes and excess rainfall are insurance contracts that make payments based on the intensity of an event (for example, hurricane wind speed, earthquake intensity, volume of rainfall) and the amount of loss calculated in a pre-agreed model caused by these events.
Losses are estimated using a model based on wind speed and storm surge (tropical cyclone policies), ground shaking (earthquake policies) or amount of rainfall (excess rainfall policies). Hazard levels are then applied to pre-defined government exposure to produce a loss estimate. Payment amounts increase with the level of modeled loss, up to a pre-defined coverage limit.
Therefore, payments can be made very quickly after a hazard event, CCRIF explained, noting that this is different from traditional indemnity insurance settlements that require an on-the-ground assessment of individual losses after an event before a payment can be made – a process that can often take months.
Between 2007 – when CCRIF was formed – and 2016, the facility made 22 payments to 10 member governments, totalling approximately US$69 million, on their tropical cyclone, earthquake and/or excess rainfall insurance policies. These new payments following Irma bring the total payments to almost US$100 million.
Source: CCRIF