CCRIF Considering Need to Expand Coverages after Haiti Quake

March 17, 2010

A bulletin from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) indicates that many of its member countries “are re-examining their preparedness for natural catastrophes, including their levels of coverage under CCRIF.” There are currently sixteen Caribbean governments, who, since 2007, have “included parametric insurance policies against hurricanes and earthquakes” as part of their countries’ disaster risk management portfolios.

The recent earthquakes in Haiti and Chile have underlined the importance of the unique type of protection CCRIF offers. It paid $7.75 Million, or 20 times Haiti’s premium, following the devastating earthquake on January 12, which “demonstrated the speed at which CCRIF is able to make funds available to governments after a disaster,” said the bulletin. “However, the small size of that payment relative to the levels of devastation highlights the need for increased levels of coverage that would result in larger payouts which can do even more to stabilize government services and provide a springboard to more rapid and comprehensive recovery.

“Over the last two and a half years, CCRIF has achieved global prominence as a model for innovative, ex-ante disaster risk transfer. Such mechanisms can and should be included in disaster risk management strategies for countries vulnerable to hurricanes, earthquakes and other natural catastrophe events, and can be a critical component of a country’s climate change adaptation framework.

CCRIF has previously paid out almost $1 Million to the Dominican and St. Lucian governments after the November 2007 earthquake in the eastern Caribbean and about $6.3 Million to the Turks & Caicos Islands after Hurricane Ike made a direct hit on Grand Turk in September 2008.

The Caribbean countries are now faced with decisions regarding the level of their CCRIF coverage, which is renewed each year on June first, against the backdrop of reduced fiscal space emanating from the continued legacy of the global economic crisis.

The CCRIF Board and operations team have recognized the countries’ predicament. They’ve “been engaged in a number of activities aimed at finding solutions that would enable its members to continue to pursue diversified and dynamic disaster risk management policies. One such activity has been meeting with country clients and key stakeholders towards ascertaining members’ needs and then making the case to international donor partners for the need for assistance in stepping up the level of coverage that countries are able to garner from CCRIF.”

Dr. Simon Young, CEO of Caribbean Risk Managers, the Facility Supervisor of CCRIF, explained: “We believe that there is a very strong case to be made to the international development community to assist CCRIF’s member countries (and potential new members) in ‘upscaling’ the role that risk transfer plays in post-disaster financing.

“In so doing, CCRIF would become an even stronger example of a successful, innovative public-private partnership addressing a core barrier to sustainable development, particularly in the face of climate change.”

The bulletin also noted that at the CARICOM Heads of Government meeting in Dominica, World Bank President Robert Zoellick presented the strong interest of the Bank in developing “a strategy [for the region] that focuses on growth … good fiscal management, effective use of debt, maybe looking at some of the issues of what else one can do to build insurance for some of the natural calamities that tend to create a spike in debt.”

Source: Caribbean Catastrophe Risk Insurance Facility – www.ccrif.org

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