The CCRIF SPC (formerly called the Caribbean Catastrophe Risk Insurance Facility), the parametric disaster insurance facility serving the Caribbean and Central America, is set to make its first payout of the 2018/2019 policy year to Barbados of more than $5.8 million following the passage of Tropical Storm Kirk.
Heavy rainfall that occurred during the passage of Tropical Storm Kirk has resulted in Barbados receiving a payout on its parametric Excess Rainfall insurance policy of $5.813 million (roughly BDS$11.6 million), the sixth payout the country has now received from the CRRIF SPC.
Barbados has been a member of the CCRIF SPC since its establishment in 2007, and the latest payment takes its total payouts to more than $19.3 million from six events.
The payout from Tropical Storm Kirk is set to be the second largest payment the country has received from the CCRIF SPC overall, and the largest under its excess rainfall policy. In 2010, Barbados received a payout of more than $8.56 million as a result of Tropical Cyclone Thomas under its tropical cyclone policy, the largest payment it has received.
Barbados received a payout of $1.28 million from the CCRIF SPC under its excess rainfall policy in 2014 as a result of a trough system, and in 2016, received a payout of $975,000 under its tropical cyclone policy and $753,000 under its excess rainfall policy, as a result of Tropical Cyclone Matthew.
Then, in 2016, the CCRIF SPC made a payment of more than $1.9 million to Barbados under its excess rainfall policy as a result of the impacts of Tropical Cyclone Maria, which, combined with Tropical Storm Kirk and the above events, takes total payments received by Barbados from the CCRIF SPC, under both is tropical cyclone and excess rainfall policies, to $19.3 million.
The excess rainfall product is designed to cover extreme high rainfall events of short duration (a few hours to a few days), whether they happen during a tropical cyclone (hurricane) or not. The rainfall insurance product has shown its value already, having been triggered a number of times over the years, ensuring rapid payouts to those in need.
The CCRIF pools the 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.