The passage of tropical storm Kirk close to Barbados in October triggered the Caribbean nations parametric rainfall insurance policy under the CCRIF SPC, resulting in a $5.8 million payout.
The CCRIF SPC (formerly called the Caribbean Catastrophe Risk Insurance Facility) has made a payout of $5.8 million to Barbados under its parametric excess rainfall coverage within 14 days of the tropical storm impacting the island.
Once again, this demonstrates the speed with which payouts can be made using parametric triggers and supported by the efficiency of global reinsurance market backing.
Prime Minister Mottley of Barbados thanked CCRIF saying, “Every dollar in damage for a country that is in a tight fiscal situation is a dollar that we really would have preferred not to lose and therefore [we are pleased] to have this sum coming back to us to help us offset some of the damage as a result of Tropical Storm Kirk. we are trying to take a proactive approach and this money will help us to continue in that manner.”
Since it was initially launched back in 2007, the CCRIF has now made payouts totaling $136.3 million to 13 of its member governments across the Caribbean and Central America, $19.3 million of which has been paid to Barbados for a number of events.
Trinidad and Tobago is also seeking assistance from the CCRIF after an extreme rainfall event struck the islands on October 20th, causing its government to request that the CCRIF assess whether any payout would be due under its parametric excess rainfall policy.
The Government said, “The Ministry of Finance has a catastrophe insurance policy with CCRIF, to cater for damage to physical infrastructure, the cost of clean-up and rescue operations, and funding for disaster relief for citizens and residents of Trinidad and Tobago.
“CCRIF was advised on Saturday that Trinidad and Tobago was experiencing unusually heavy rainfall and suffering from severe flooding. Urgent disbursement of funds was requested from this country’s excessive rainfall insurance policy with CCRIF.”
It’s understood the CCRIF is now assessing the Trinidad & Tobago claim.
The regional disaster insurance facility has found itself increasingly in demand and paying claims, all of which have been made within the 14 day period after a disaster event strikes.
This has clearly demonstrated the value of parametric insurance coverage and it’s hoped that the governments will increase their policy limits over time to require greater amounts of reinsurance backing, to provide sufficient coverage to help them recover after major loss events hit their islands.
The CCRIF pools catastrophe risk from its member countries and then accesses the global reinsurance markets to provide the financial backing for its parametric products and payouts.
The parametric disaster insurance facility has recently widened its risk pool with the addition of St. Maarten, which takes the number of members of the facility to 20 countries – 19 Caribbean governments and 1 Central American government.
As a result, increasing amounts of reinsurance capacity are expected to be needed to underpin the parametric insurance products as the risk pool grows.