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FAQ

What factors determine if there is a payout or not?

The CCRIF payout calculation proceeds in a very similar way to a traditional insurance payout. The only difference is the way in which the loss is estimated. For CCRIF, the loss is calculated through an index or model in which hazard levels (wind, storm surge and waves for hurricane, ground shaking for earthquake) are used as a proxy for losses. In a traditional loss estimation, a loss adjuster will visit each claim and decide what the cost of repair is relative to the original replacement value of the building.

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What is CCRIF’s hazard and loss modelling framework?

CCRIF’s second-generation hazard and loss modelling framework has been developed to assist CCRIF in developing new policy formulations and in developing regional technical capacity in catastrophe risk modelling. It will enable a new approach to policy formulation - one of modelled loss instead of index parametric, the latter being the current basis for policies. This means that the new policy will be able to reduce the basis risk in the parametric loss estimates by modelling each loss as it happens, rather than reducing the loss estimation methodology to a series of equations.

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Why does CCRIF use National Hurricane Center data to determine loss for hurricanes

In order for CCRIF to secure reinsurance in the international market, reinsurers must trust that the information is from an independent and reliable source. Since Doppler radar and other meteorological and geophysical data collection instruments in the region are operated by institutions within the very governments purchasing the CCRIF insurance product, there could be a conflict of interest in directly using the information from these measuring sources to determine loss.

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What is the Real Time Hazard and Impact Forecasting System (RTFS) and how can it be used by member countries?

Starting in the 2008/09 hurricane season CCRIF offered members and supporting partner organisations access to Kinanco’s Real Time Hazard and Impact Forecasting System (RTFS), which is a storm impact forecast tool, built on the core TAOS (‘The Arbiter of Storms’) modelling technology which also supports CCRIF’s second-generation loss model.

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How are CCRIF policies renewed?

CCRIF policies are renewed on 1 June every year and last for one year. Each year, countries have the opportunity to consider their coverage characteristics (deductible and policy limit) and premium level. CCRIF has been able to reduce premiums by around 10% each year and aims to continue to keep prices as low as possible while maintaining a level of financial security which will ensure that it can pay claims in full even for the largest events.

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