CCRIF SPC has established the Caribbean Water Utility Insurance Collective (CWUIC) as a segregated portfolio, enabling water utilities in the Caribbean to access parametric insurance for financial protection against extreme weather events.
CCRIF is a multi-country, multi-peril risk pool providing parametric insurance to 19 Caribbean governments, 4 Central American governments, and 3 Caribbean electric utilities.
The new water utilities product is the CCRIF’s sixth, building on its five parametric insurance products for tropical cyclones, excess rainfall, earthquakes, for the fisheries sector and the electric utilities sector for transmission and distribution.
The organisation explains that CWUIC SP has been in development for the last two years, with the Inter-American Development Bank (IDB) providing technical and financial support for the structuring. CCRIF undertook the modelling work to develop the insurance model that will underpin the water utilities insurance product it developed and allow CWUIC to provide coverage to water utilities.
Other key partners include the UK Foreign, Commonwealth and Development Office (FCDO), and the Caribbean Development Bank (CDB). So far, a total of $84.5 million of grant resources has been mobilized for CWUIC, including $7.8 million from the IDB, of which a total of $5.6 million was provided by the UK Government through the FCDO to support technical assistance to finalize the structuring of CWUIC, as well as to provide premium subsidies for the insurance coverage to water utilities in six Caribbean countries.
Additionally, CBD has approved grant funds of $650,000 in technical assistance, and FCDO has also provided development aid of $25 million to CCRIF to capitalize CWUIC. CCRIF notes that this will be leveraged in combination with reinsurance to protect CWUIC SP against unexpected losses from policy claims.
Isaac Anthony, CCRIF CEO, said: “CWUIC benefits from CCRIF’s 16-year experience of offering parametric insurance policies to provide coverage against natural hazards to governments as well as Caribbean electric utility companies. With CWUIC, CCRIF continues to leverage its state-of-the-art parametric insurance base models–tropical cyclone and excess rainfall–to produce models and products for key economic sectors that are usually not able to access affordable insurance coverage against natural hazards.”
Currently, approximately 35 water utilities in 29 territories in the Caribbean have been identified as potential clients for CWUIC. The goal is to support water utilities in emergency response planning and restoring and rebuilding post-disaster.
The region is prone to hurricanes, tropical storms, and excess rainfall events.
CCRIF explains that water utilities across the region have limited financial resources and are often unable to recover in a timely manner to provide safe drinking water and sanitation services following natural disasters.
Parametric insurance provides rapid payout post-event, which is key for a quick recovery. In fact, CCRIF is committed to providing payouts within 14 days after a member’s policy is triggered.
David Rutley, UK Minister for the Americas and Caribbean, said: “The people of the Caribbean are on the frontline of natural disasters, which are increasing in frequency due to climate change. This first-of-its-kind scheme will enable Caribbean countries to maintain essential services in the face of storms and floods, while greatly reducing the financial burden on individual governments. The UK is determined to play its part in helping small island developing states build resilience to extreme weather events with access to fairer and reliable funding.”
Isaac Solomon, CDB’s Vice President of Operations, added” “The story of CWUIC SP’s development is one of donor collaboration in response to an expressed demand from utilities and endorsed by regional governments. CDB has been an integral part of the Working Group that designed and established CWUIC SP, acknowledging that the water utilities in all our Borrowing Member Countries (BMCs) should have access to this facility.
“For this reason, CDB has committed additional resources to extend the analytical work required to provide coverage to all BMC water utilities. CDB believes that CWUIC SP is uniquely positioned to change the lives of Caribbean people by enabling water utilities to maintain business continuity following a natural disaster–a time when the role of water becomes critical to clean-up efforts, healthcare and basic human needs.”
