Parametric Pacific Catastrophe Risk Insurance Pilot renews for third season

The Governments of Samoa, Tonga, Cook Islands, Vanuatu and the Marshall Islands have called for an extension to the Pacific Catastrophe Risk Insurance Pilot (PCRIP), which was renewed for its third term on November 1^st 2014.

The scheme was launched through a combined effort from the Japanese Government, the World Bank, the Secretariat of the Pacific Community (SPC) and the Global Facility for Disaster Reduction and Recovery (GFDRR), providing member states with vital post-disaster recovery capacity and capabilities.

The renewal will run from November 1^st 2014 until October 31^st next year and member states are hopeful of continuation after this date following the success the scheme has seen since inception.

So far, Pacific Island Countries (PICs) have secured roughly $43 million of aggregate insurance protection against tropical cyclones, earthquakes and tsunamis, with Tonga receiving the funds first payout earlier this year, as reported by Artemis.

Category 5 Cyclone Ian struck Tonga’s Ha’apai island group on January 11^th and 12^th this year, causing widespread displacement, extensive crop and infrastructure damage while claiming one life. But the immediate response and $1.27 million payout made possible by the PCRIP greatly aided the regions recovery time and capabilities, showing just how beneficial and effective this type of fund can be.

Tonga’s Minister of Finance Dr. Asiake Valu Eke commented; “The cash received from the risk insurance pilot made an important financial contribution for carrying out the governments’ strategy for mitigating natural disasters,” adding, “Thanks to this initiative, Tonga is now on its way to recover without interruption ensuring people can return to their everyday lives quickly.”

Around this time last year Artemis reported the insurance pool’s previous renewal including news of the Cook Islands becoming its sixth member, taking the total aggregate insurance coverage to $67 million. But as mentioned earlier in this article that figure is now at $43 million ($24 million less) protecting just five member states, with the exclusion of the Solomon Islands, which is likely due to a decision from their Government not to renew for the third season.

Unfortunately these smaller islands are among the most vulnerably exposed to natural disasters, with reports suggesting roughly 9.2 million people in the Pacific have been impacted by natural catastrophes in the last 65 years, causing damages somewhere in the region of $3.2 billion (average annual losses from disasters can be as high as 6.6% of GDP).

The World Bank’s Country Director for the Pacific Islands, Franz Drees-Gross commented on the renewal; “The continuation of the insurance pilot in the Pacific is an important step towards the creation od sustainable post-disaster financing options for small island states. Insurance payouts through this pilot offer immediate financial support to countries affected by natural disasters, something international aid often can’t provide as quickly.”