The management of the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) is appealing to Caribbean and Central American governments to increase their insurance coverage with the facility to help mitigate the cost of devastating natural disasters. The facility, created in 2007, provides financial support within 14 days to territories hit by hurricanes, tropical cyclones and earthquakes. Initially targeted at Caribbean countries, in 2015, it was expanded to include countries of Central America.
Dominica, one of the most seriously affected countries of the 2017 Atlantic Hurricane Season, is set to receive an initial payment of US $19, 294.800 on insurance policies held with CCRIF SPC following the passage of Category 5 Hurricane Maria on September 19.
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.
Dominica was not the only island to benefit from the CCRIF. After the widespread damage and destruction caused earlier in September by Hurricane Irma, the most powerful Atlantic Ocean hurricane in recorded history, CCRIF SPC made about US$15.6 million (EC$42 million) in payments to the governments of Antigua & Barbuda, Anguilla and St Kitts & Nevis under their Tropical Cyclone policies. Antigua & Barbuda was expected to receive US$ 6,794,875 (EC$ 18,346,163) Anguilla: US$ 6,529,100 (EC$ 17,628,570); St. Kitts & Nevis US$ 2,294,603 (EC$ 6,195,428) for a total of US$ 15,618,578 or EC$ 42,170,161. According to a statement from CCRIF SPC, Anguilla and St. Kitts & Nevis also had Excess Rainfall policies and if it is determined that these policies were triggered by the rains from Hurricane Irma, the islands would be entitled to a second payout under those policies.
CCRIF SPC noted the payments would bring to US$50.7 million the amount paid out to affected regional territories in the 2017 Atlantic Hurricane Season and to US$120 million the amount paid to affected islands since the CCRIF SPC’s inception.
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.”
Commenting on the utility of the facility in early September when he signed a Memorandum of Understanding with the Association of Caribbean States at the ACS Secretariat, Sweet Briar Road, Port-of-Spain, Anthony said immediate access to liquidity is critical for governments following a disaster and while the international community provides relief, those funds are often slow to be released, taking as many as six to 12 months. Government borrowing and reallocation of funds in their budgets also takes time and smaller governments such as those in the Caribbean and most of the Small Island Developing States (SIDS), with their high debt burdens, can no longer afford to self-finance disaster risk. He said the facility is an excellent financing option for the region in which countries can invest in national catastrophic risk insurance to cover the cost of recovery from natural disasters, noting that the CCRIF operates as a not-for-profit mutual organisation and all the residual profits made by the facility goes back to members.
CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalised through contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments. In 2014, an MDTF was established by the World Bank to support the development of CCRIF SPC’s new products for current and potential members, and facilitate the entry for Central American countries and additional Caribbean countries. The MDTF currently channels funds from various donors, including: Canada, through the Department of Foreign Affairs, Trade and Development; the United States, through the Department of the Treasury; the European Union, through the European Commission, and Germany, through the Federal Ministry for Economic Co-operation and Development.