The CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), is set to pay out another $8 million due to hurricane Matthew’s path through the Caribbean, as parametric excess rainfall insurance payouts are now due to four countries.
The CCRIF had already announced a payment of $975,000 for Barbados, which saw its parametric tropical cyclone insurance policy triggered by Matthew when it was still a tropical storm and $20 million for Haiti which was battered by hurricane Matthew as a category 4 storm.
But the total payout to be made by the CCRIF SPC for the combined impacts of tropical cyclone winds and extreme rainfall of hurricane Matthew, which triggered the parametric insurance policies, is set to be just over $29.2 million.
Excess rainfall payouts will be made to Haiti, Barbados, Saint Lucia and St. Vincent & the Grenadines, due to Matthew’s heavy rains triggering payments under these countries’ CCRIF Excess Rainfall policies.
So Haiti is now set to receive a total of $23.4 million, from the parametric wind and rainfall covers combined, which will be paid out as quickly as possible to assist with post-disaster recovery.
One of the benefits of the parametric trigger is the ability to define whether a payout is due very rapidly and in Haiti’s case the money it receives from the CCRIF policies will be much-needed and likely some of the fastest aid to reach the country in the wake of hurricane Matthew.
Barbados meanwhile will receive a total of $1.7 million, across both parametric wind and rainfall covers. Meanwhile Saint Lucia is set to receive almost $3.8 million from its excess rainfall cover and St. Vincent & the Grenadines just over $285,000.
The $29.2 million of hurricane Matthew payouts made by the CCRIF will not come close to troubling its catastrophe bond coverage, but we understand could result in the facility being able to call on reinsurance support for some of the loss. We don’t have details of where the CCRIF’s coverage kicks in though.
These payouts take the total paid by the CCRIF over its years in existence to $68 million, across 21 payouts to 10 member governments.
Impressively and a reflection of the benefit of applying parametric triggers to catastrophe coverage, all of these payouts were made within 14 days of the event occurring.
Haiti’s Minister of Finance, Yves Bastien, told CCRIF that; “The Government of Haiti – on behalf of the people of Haiti – appreciates the promptness with which CCRIF responded by triggering a payment of a little more than US$20 million. This payout is of upmost importance in our effort to bring some relief in different parts of the nation. Your organization may be certain we will be on your side for very long.”
CARICOM Secretary General, Ambassador Irwin LaRocque, stated; “The early response to the aftermath of Matthew as well as the supportive facility put in place to help resource the required recovery and rebuilding effort also underline the critical importance of the regional institutional frameworks established by the Community, CDEMA and the Caribbean Catastrophe Risk Insurance Facility (CCRIF), which has already processed payment to two of the affected countries, Barbados and Haiti.”
The use of parametric insurance for disaster protection and recovery funding is becoming widespread. The CCRIF has been a very good example of the benefits of this and the importance of rapid payouts.
Corporate insurance buyers are increasingly learning about parametric triggers and what they could mean for their ability to acquire rapid payouts after disasters strike, protect themselves against unusual risks that can be parameterised and provide some financial protection for less tangible risks such as contingent business interruption.
As knowledge and appreciation of the opportunities presented by parametric insurance grows we can expect to see uptake increase globally.