The sixteen member governments of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) have renewed their hurricane and earthquake insurance for the 2013/14 policy year that started June first.
The bulletin noted: “Since CCRIF’s inception in 2007 – and despite increasing economic and financial pressures – member countries have recognized the value of including CCRIF’s parametric hurricane and earthquake coverage in their national disaster risk management strategies.”
2013 has been forecast as an “active” season for Atlantic Hurricanes by the US National Oceanic and Atmospheric Administration (NOAA), which has predicted “more and stronger hurricanes than usual. For the six-month hurricane season, which began June 1, NOAA stated there was a 70 percent likelihood of 13 to 20 named storms – well above the seasonal average of 12 named storms.”
As the cost of the coverage is influenced by “budgetary constraints felt by countries across the region,” the CCRIF has taken steps to “minimize premium costs.” It is offering a “25 percent discount on premiums because no payouts were made by CCRIF in 2012/13, resulting in an underwriting surplus for the organization, which is run as a not-for-profit entity.”
The bulletin also noted that “countries could apply a portion of their Participation Fee (a deposit paid when they initially became a CCRIF member) toward their premium payment and had the option to lower the minimum attachment point for tropical cyclones (hurricanes) from a fifteen-year to a ten-year return period. These all led to a reduction in the effective cost of coverage to countries this year by at least 25 percent but in some cases up to 50 percent.
“The Facility also added the new excess rainfall product to its portfolio of offerings to Caribbean governments for 2013/14. This product specifically covers extreme rainfall events, from both cyclonic systems and from non-cyclonic systems. It should be noted that rainfall is not included in CCRIF’s current hurricane policies, which trigger based on damage from wind and storm surge.
“Many countries have consistently expressed interest in excess rainfall coverage and in fact, the new product is of interest to countries which are not yet CCRIF members since they are not vulnerable to hurricanes or earthquakes but have significant extreme rainfall risk.”
Their concerns about the damages caused by excessive rain are justified. CCRIF explained: “Rainfall is a leading cause of damage in the Caribbean – not only during hurricanes but throughout the year.”
The organization said it is “seeking ways to enable countries in the region to obtain this coverage. Earlier this year, CCRIF, in collaboration with the Caribbean Development Bank, held a meeting with international development partners to explore ways in which they could support the roll-out of this product. These donors were very interested and committed to examine how they could provide support.”
The CCRIF noted that since its inception it has “made eight payouts totaling over US$32 million to seven member governments on their hurricane or earthquake policies. All payouts were transferred to the respective governments within 14 days after each event.”
Source: the Caribbean Catastrophe Risk Insurance Facility (CCRIF)
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