The CCRIF SPC has released a report stating it has made 4 payouts totalling US$15.2 million to 3 of its member governments during October for hydrometeorological events associated with the 2022 Hurricane Season.
Nicaragua received US$8.9m on the country’s tropical cyclone policy following Hurricane Julia, which made landfall in Nicaragua on October 8 before moving into the Pacific.
Trinidad and Tobago received US$5.84 million following heavy rains that occurred during October 5-8, 2022, causing widespread flooding in the twin-island nation.
Antigua and Barbuda also received US$420,645 on the country’s excess rainfall policy following rains associated with Tropical Cyclone Fiona.
The report suggests that these recent payouts bring CCRIF’s total policy payouts to US$260 million, adding that since its inception in 2007, the Facility has made 58 payouts to 16 of its 24 members.
CCRIF CEO, Isaac Anthony, commented, “In the face of a changing climate, parametric insurance is a must-have tool for governments in the Caribbean and Central America.
“CCRIF has been in the business of providing parametric insurance for the last 15 years and we continue to be encouraged that we are able to support our members to have access to quick liquidity after a natural disaster, to begin recovery efforts and to support the most vulnerable in their populations.”
At the beginning of August, the CCRIF SPC member governments renewed their paramedic insurance coverage for tropical cyclones, excess rainfall and earthquakes, and the fisheries sector for the policy year 2022/23, expanded their risk pool by 10% year-on-year, renewing $1.2 billion of coverage.
CCRIF notes that its parametric insurance policies are different from traditional indemnity insurance policies, as they payments based on the intensity of a natural hazard event, for example, hurricane wind speed, earthquake intensity, or volume of rainfall, the exposure or assets affected by the event, and the amount of loss caused by the event, calculated in a pre-agreed model.
Therefore, the Facility states that it does not need to wait for on-the-ground assessments of loss and damage to make payouts, enabling it to disburse funds to members within 14 days of an event.
“Parametric insurance must not be seen in isolation from other disaster risk financing tools,” says Anthony.
He also urges countries in the region to take a more holistic approach to disaster risk financing and to build a financial protection strategy that combines a number of risk financing instruments that address different layers or types of risk, including disaster reserve funds (DRFs), contingent credit facilities, and CAT bonds.
“All these instruments have unique and distinct characteristics and are necessary to finance early response, recovery, and reconstruction needs while protecting a country’s fiscal balance,” Anthony adds.
