The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has joined up with the Caribbean Institute for Meterology and Hydrology (CIMH) and Kinetic Analysis Corporation (Kinanco) to develop and test a parametric excess rainfall insurance product for catastrophic flood coverage in the region.The new rainfall product will be particularly relevant for the agricultural industry. It will also be more affordable than a standard insurance policy and more likely to pay out at the right times.
The new product will utilise a modelled rainfall index developed within a second generation framework. They’ve already been working on a proof of concept which has been extensively tested during the summer. At the same time they have been working on reaching out to the communities of potential clients and reinsurers to ensure familiarity and acceptance of this new product. They are now focusing on testing different methodology options and are aiming to have a product ready for market by late 2009 or early 2010.
This could be just what the Caribbean needs to supplement the already available CCRIF windstorm coverage. In the past the CCRIF have been criticised for not providing enough cover, particularly when it came to less powerful tropical storms which didn’t pack strong enough winds to trigger the main facility but still managed to cause much damage through rainfall and flooding. Perhaps this new product is a positive response to those criticisms and an attempt to bring a product to market which could fill the coverage gap.