No hurricane Paloma payout for Cayman Islands from the CCRIF

by Artemis on November 29, 2008

The Cayman Islands will not receive any payout from the Caribbean Catastrophe Risk Insurance Facility for the damage incurred on Cayman Brac from hurricane Paloma. As we said a few weeks ago, this is due to the high deductible level purchased by the Cayman Islands. The high deductible means that for the storm to have qualified for payment it would have to have impacted Grand Cayman where the majority of economic activity is centered on the islands.

The facility is doing what it was designed to, but the feeling amongst locals in the Caribbean is that the nations are paying a large premium for no cover in cases of storms like this. It seems that for the facility to provide wider protection to a nation a higher premium must be paid (this allows for the deductible to be lower). The CCRIF is a parametric insurance facility and uses wind speed, storm track data and risk models to calculate whether damage from a storm is greater than a countries deductible. Perhaps a policy could be designed for smaller islands which is based on actual losses, this may seem fairer under storm circumstances such as this?

Read our previous coverage about the Caribbean Catastrophe Risk Insurance Facility.

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