Grand Cayman, Cayman Islands, September 5, 2018. CCRIF SPC is pleased to announce that St. Maarten has joined CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), purchasing coverage for tropical cyclones, earthquakes and excess rainfall. St. Maarten joined the Facility on September 1 as a late entrant this policy year which began on June 1, 2018. CCRIF’s membership now stands at 20 countries – 19 Caribbean governments and 1 Central American government – as in this policy year both the British Virgin Islands and Montserrat also joined the Facility.
CCRIF provides parametric insurance coverage, the selection of which is largely driven by the fact that parametric insurance is generally less expensive than an equivalent traditional indemnity insurance product as it does not require a loss assessment procedure in case of a disaster. This is an important feature considering the urgent need for liquidity by a government after a catastrophe.
St. Maarten, like 12 other Caribbean countries, was severely impacted by Hurricane Irma in September 2017 with damages in the country estimated by the Government and contained in its disaster recovery plan to be in excess of US$1.8 billion. Following Tropical Cyclones Irma and Maria in 2017, CCRIF made payouts totaling US$55 million to 9 member governments. Since CCRIF’s inception in 2007, it has made 36 payouts totalling US$130.5 million to 13 member governments, all within 14 days of the event – one of the Facility’s core principles.
It is the parametric nature of CCRIF’s policies that enables rapid payouts against losses estimated in a catastrophe risk model (which can provide such estimates almost instantaneously). These payouts allow governments to reduce their budget volatility and to provide capital for emergency relief as well as assistance to the affected population and restore critical infrastructure and homes. While these payments are relatively small compared to the overwhelming cost of rebuilding, this rapid infusion of liquidity allows our members to address immediate priorities and reduce post-disaster resource deficits.
CCRIF CEO, Mr. Isaac Anthony said “We are pleased to welcome St. Maarten as a new member to CCRIF and look forward to working with the Government of St. Maarten to strengthen its disaster risk management framework in the face of increasing climate-related risks.”
St. Maarten is joining CCRIF at a time when countries are increasingly recognizing that parametric insurance and risk transfer mechanisms are valuable tools to support financial and social protection strategies within countries given the increasing occurrence of natural hazards due to a changing climate.
About CCRIF SPC: CCRIF SPC is a segregated portfolio company, owned, operated and registered in the Caribbean. It limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and – since 2015 – Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered. It is the world’s first regional fund utilising parametric insurance, giving member governments the unique opportunity to purchase earthquake, hurricane and excess rainfall catastrophe coverage with lowest-possible pricing. CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalized 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 Cooperation and Development. In 2017, the Caribbean Development Bank, with resources provided by Mexico, approved a grant to CCRIF SPC to provide enhanced insurance coverage to the Bank’s Borrowing Member Countries that insure through CCRIF against tropical cyclone, earthquake and excess rainfall risks.