A powerful earthquake that rocked the eastern Caribbean last month has for the first time triggered use of an insurance pool that provides emergency cash to regional islands after a significant natural disaster.
The magnitude-7.4 quake, which was centered beneath the channel that separates the small islands of Dominica and Martinique when it hit on Nov. 29, resulted in a nearly $1 million (euro689,000) catastrophe payout from the disaster pool, fund supervisor Simon Young said.
The strong undersea temblor, which damaged homes and water pipes but led to no serious injuries in the two island nations, surpassed policy thresholds to issue payments of $528,000 (euro363,740) for Dominica and $419,00 (euro289,000) for St. Lucia.
The countries received the lump sum payments from the disaster fund shortly before the U.S. Geological Survey issued its final report on the powerful Caribbean quake.
“It was a small enough amount that we could activate the payment before the holidays,” Young said from the Washington office of Caribbean Risk Managers Ltd., which oversees the fund.
The insurance program, which the World Bank says is unique, lets small Caribbean countries pool their risk to natural disasters, slashing individual premiums by 40 percent. Nations pay annual premiums from $200,000 to $2 million (euro137,779 to euro1.38 million) and in return are eligible for disaster payouts of $10 million to $50 million (euro7.4 million to euro37 million).
The French overseas department of Martinique, which sustained the brunt of the November quake, is not a member of the Caribbean Catastrophe Risk Insurance Facility. Claims there will be covered by the French state-owned reinsurance company, Caisse Centrale de Reassurance.
The 15-nation Caribbean Community and the British Atlantic territory of Bermuda purchased policy deductibles that were fixed to pay out over 20 years for damage incurred in hurricanes or earthquakes, Young said.
Caribbean Community leaders requested World Bank assistance in establishing the emergency insurance fund after Hurricane Ivan caused widespread devastation in 2004.
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