The government of Tonga is set to receive a $4.5 million payout from the Pacific Catastrophe Risk Insurance Company (PCRIC) based on its insurance cover against tropical cyclones, the largest payment in the company’s history.
Cyclone Harold recently hit the region and these funds will provide the government with rapid-response financing to support disaster-relief effort.
Tonga is one of the Pacific Island countries that purchased catastrophe risk insurance from PCRIC– a regional catastrophe insurance platform that offers governments insurance cover against climate and seismic hazards, currently tropical cyclones and earthquake/tsunamis.
PCRIC policies are designed to payout quickly after a triggering event to provide immediate access to liquidity for disaster response.
“These funds will enhance our ability to respond to the needs of our communities impacted by Cyclone Harold and already dealing with the impacts of the COVID-19 global pandemic,” said Balwyn Fa’otusia, CEO for the Tonga Ministry of Finance.
Cyclone Harold reached it speak intensity as a Category 5 cyclone as it tore a path across the Solomon Islands, Vanuatu, Fiji and Tonga, causing widespread destruction across the region.
The cyclone passed within 100km of Tongatapu, Tonga’s main island,with significant storm surge coinciding with king tides, which caused widespread damage aroznd the coastline.
“Our thoughts and prayers go out to the affected communities across the Pacific,” said PCRIC Interim Chairman, Sarah-Jane Wild.
”PCRIC is committed to ongoing efforts to develop new products to increase the financial protection of governments against the impacts of natural hazards including drought, excess rainfall and other seismic and climate hazards.”
“We also value the close working relationship we have with the World Bank who administers the PCRAFI multi-donor trust fund that has been instrumental in supporting PCRIC through its establishment, and look forward to strengthening this relationship along with wider relationships with other key international organizations and in particular PIC governments to ensure we continue to refine our products and services to better respond to the insurance needs of the region.”