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How are premiums determined?

Premiums are determined by the amount of coverage a country decides to take, the attachment and exhaustion points of that coverage, and the risk profile of the country. Thus each country pays in exact proportion to the amount of risk it is transferring to CCRIF, so that there is no cross-subsidisation.


Has CCRIF made payouts to date?

Yes. In 2007, CCRIF paid out almost US$1 Million to the Dominican and St Lucian governments after the 29 November earthquake in the eastern Caribbean, and in 2008, CCRIF paid out ~US$6.3 Million to the Turks & Caicos Islands after Hurricane Ike made a direct hit on Grand Turk. Most recently, Haiti received a payment of US$7.75M (approximately 20 times their premium for earthquake coverage of US$385,500) 14 days after being struck by a devastating earthquake of magnitude 7.0 on 12 January 2010.


How is the financial stability of CCRIF sustained?

CCRIF functions similarly to a mutual insurance company which is controlled by its participating governments. It was initially capitalised by the participating countries themselves, with support from donor partners. To better understand how CCRIF functions, one could consider a system by which several countries would agree to combine their emergency reserve funds into a common pool.


How does CCRIF use donations and premiums paid to the Facility?

CCRIF keeps its assets relatively liquid to ensure quick payout if a member government’s policy is triggered. At least US$20M is held as cash or cash-equivalent, while the remainder is managed by a specialist investment company. The returns on these investments are used to lower the long-term costs of premiums and to offset the Facility’s operating costs.


Why was there a payout for Dominica and St. Lucia after the November 2007 earthquake ...

Most of the losses inflicted on Jamaica, St. Lucia and Dominica as a result of Hurricane Dean were to the agricultural sector which is specifically NOT covered in the CCRIF modelling (as it is not a direct cost to government). Also, the 20-year deductible for hurricanes is much higher (in terms of the dollar value of losses) than for earthquakes, hence the policy will trigger a payment for a smaller overall loss from an earthquake as opposed to a hurricane in almost all countries, with Trinidad & Tobago being the only exception (because of its high earthquake risk).



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