Barbados is set to receive a $975,000 payout thanks to its parametric tropical cyclone insurance policy from the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), after hurricane Matthew triggered the facility.
The payout is actually from when Matthew was still a tropical storm, affecting five of the CCRIF’s member countries, Barbados, Dominica, Grenada, Saint Lucia and St. Vincent & the Grenadines, on 28th September.
The CCRIF said that preliminary runs of its loss model for wind and storm surge produced no government losses in Grenada and Dominica and some government losses in Barbados, Saint Lucia and St. Vincent & the Grenadines.
Modelled loss levels in Saint Lucia and St. Vincent & the Grenadines were below the attachment points for each country’s parametric Tropical Cyclone insurance policy, meaning that no payout is due to them.
However, in Barbados the modelled loss was above its parametric Tropical Cyclone insurance policy’s attachment point, triggering the facility for the first time under hurricane Matthew and the CCRIF’s preliminary calculations show that a payout of US$975,000 is due.
The benefits of parametric cover for countries such as this, which are exposed to storm events, cannot be understated. The rapid calculation and ability to make payouts quickly benefits governments and their population in recovering from disasters such as this.
The five countries affected by Matthew as a tropical storm also have excess rainfall policies, which pay out based on parametric factors relating to rainfall totals. The CCRIF is set to issue a report on this in the coming days.
Hurricane Matthew then went on to impact Jamaica, Haiti and Cuba, and is now impacting the Bahamas severely with Florida next in its sights.
Jamaica, Haiti and the Bahamas are all members, with tropical cyclone policies under the CCRIF facility and excess rainfall coverage too. Some of these may also have been triggered, we would imagine, given the severity of hurricane Matthew as it neared this region of the Caribbean.
With the CCRIF set to make payouts it could end up calling on its reinsurance, depending on the levels of payouts required for Haiti and the Bahamas, which look to be the most impacted by Matthew.
Whether that would be sufficient to cause the CCRIF to call on its reinsurance panel, or even its $30m catastrophe bond (World Bank – CCRIF 2014-1) which was issued under the World Bank Treasury programme a few years ago, remains uncertain.
The CCRIF will issue a further report on the rest of its Caribbean members and hurricane Matthew in the coming days.
Also read our previous articles on hurricane Matthew: