CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) is to pay US $19,294,800 to Dominica on insurance policies the island had with CCRIF SPC following the passage of Hurricane Maria on September 19, 2017. In accordance with CCRIF SPC’s mandate, the payment will be made within 14 days of the hurricane’s passage and will bring to US $50.7 million the amount paid out to affected regional territories in the 2017 Atlantic Hurricane season. The payment will bring to US$120 million the amount paid to affected islands since CCRIF SPC was formed in 2007.
CCRIF SPC was created to provide quick liquidity to governments of the Caribbean following catastrophic events such as tropical cyclones, earthquakes and excess rainfall. The programme was expanded to include countries of Central America in 2015. The payment to Dominica is being made under its tropical cyclone coverage, but Dominica also has an excess rainfall policy with CCRIF SPC and the organisation is assessing whether that policy was also triggered by Hurricane Maria. That assessment will be completed in the next few days, CCRIF SPC said in a statement. The statement said that CCRIF SPC was designed to provide immediate liquidity to countries affected by major natural disasters, allowing continuity of government operations, the speedy restoration of critical infrastructure which may have been damaged or destroyed and most importantly addressing humanitarian needs. It said,”When a disaster occurs, governments must mobilise resources quickly without jeopardising their fiscal balance. This is generally done by building a financial protection strategy that combines a number of instruments in a risk-layering approach to match potential financial needs and manage volatility on the fiscal accounts. The strategy incorporates budget allocations and reserves, as well as risk transfer instruments such as CCRIF SPC.” It advised that governments should include a facility such as CCRIF SPC in any optimal national disaster risk financing strategy. Chief Executive Officer of CCRIF SPC, Isaac Anthony, said, “While we are saddened by the devastation from both tropical cyclones Irma and Maria, we continue to be pleased to support our member countries in their time of need and are encouraged by the annual renewal of policies by our members. This provides some strong evidence that our model is a benefit to the region as well as a template that can be adopted and adapted by other regions of the world”.
In a speech to mark the signing of a Memorandum of Understanding between CCRIF SPC and the Association of Caribbean States (ACS) on September 4, 2017 at the ACS Secretariat, Sweet Briar Road, Port of Spain, Anthony said CCRIF SPC is the world’s first regional fund using parametric insurance, a type of insurance in which payment is triggered when specific conditions, or parameters, are met. Because the parameters are already specified, experts say no loss adjusters are needed, allowing for speedy payments. Anthony said the CCRIF has consistently paid out on insurance policies within 14 days of the insured event. He said the parametric nature of the policies allows for rapid payouts against losses and keeping operational expenses to a minimum. He said that since its formation in 2007, CCRIF SPC has paid out a little more than U.S. $100 million to 12 of its 17 member countries – all within 14 days of the insured event. Following the passage of hurricane Mathew last year, he said CCRIF SPC paid U.S. $29.2 million to four member countries affected by that hurricane: Haiti; Barbados; St Lucia and St. Vincent and the Grenadines; and all the payments were made within 14 days of the hurricane.
He said the majority of the payment - US $23.4 million - went to Haiti under its Tropical Cyclone policy which covered wind and storm surge and its Excess Rainfall policy. A statement from CCRIF SPC said the quick-disbursing insurance payments it provides is particularly useful for the affected countries because it spares cash-strapped governments from having to alter their budgets and take loans to meet the exigencies of expensive and urgent repairs to and rebuilding of major infrastructure items. He cited the earthquake which struck Haiti in 2010, noting that that country’s earthquake insurance payout of about US $7.8 million from CCRIF SPC (20 times more than the insurance premium) was the first set of funds Haiti received and was paod long before the funds pledged by international financial institutions and governments. He said that CCRIF SPC’s payment – made 14 days after the earthquake – represented about 50 per cent of the total aid the Government in the form of direct liquidity which the government received in the first 10 weeks after the quake. The importance of the speed of the payment is obvious when considering that “according to reports, more than six months after the earthquake, less than 10 per cent of the US $5 billion in donor pledges had been received.”
An earlier version of this story mistakenly published the amount to be paid to Dominica by the CCRIF as US$19,294.80. The actual amount to be paid to Dominica is US$19,294,800. The article has since been updated.