The Caribbean Catastrophe Risk Facility, CCRIF SPC, will make a US$7 million payout to Trinidad & Tobago on its Excess Rainfall (XSR) policy for heavy late October rainfall.
Local officials and technocrats in Trinidad have referred to the recent rainfall, which caused widespread flooding, as “unprecedented.”
The Trinidad & Tobago government purchased CCRIF SPC policies for the first time this year, after the country was hit with severe hydrological events in recent years, and will now already be able to reap the benefits of quick liquidity for immediate repairs and recovery efforts.
The government has two separate XSR policies in place, one for Trinidad and one for Tobago and will receive the payout within 14 days after the end of the event, in keeping with CCRIF SPC policy.
This payout to the Government of Trinidad & Tobago brings the total CCRIF payouts in 2017 to approximately US$61.5 million, which includes US$30.8 million for Hurricane Irma and US$23.6 million for Hurricane Maria.
CCRIF SPC insurance products for earthquakes, tropical cyclones and excess rainfall are structured on a parametric basis, and make payments based on the intensity of an event and the amount of loss calculated in a pre-agreed model caused by these events, enabling rapid payout.
For rainfall, losses are estimated using a model based on amount of rainfall (excess rainfall); hazard levels are then applied to pre-defined government exposure to produce a loss estimate and payout amounts increase with the level of modelled loss up to a pre-defined coverage limit.
The CCRIF SPC was designed to allow governments to reduce their budget volatility and to guarantee sufficient capital for emergency relief through quick post-disaster liquidity.
Since its 2007 inception, CCRIF SPC payouts to its 12 member governments have totalled US$130 million.
An Economic of Climate Adaption (ECA) Study undertaken by CCRIF SPC, demonstrates the Caribbean is experiencing the devastating effects of climate change, with annual losses expected from wind, storm surge and inland flooding predicted to increase up to 1-3 % of GDP by 2030.
