The CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility) has expanded its parametric disaster insurance risk pool to more than $1 billion, as all of its Caribbean member countries renewed their coverage and some expanded the protection they benefit from.
The CCRIF SPC provides parametric disaster insurance protection to Caribbean and Central American nations, covering perils including tropical storms, earthquakes, excess rainfall, among others.
The CCRIF acts as a risk pooling facility, assuming parametric disaster risk exposure from its members, pooling that risk to enable efficiencies based on diversification and then leverages the global reinsurance and capital markets for risk transfer to ensure it can pay claims when they occur.
Member governments in the Caribbean ceded more than $1 billion of risk to the CCRIF SPC, purchasing coverage from its tropical cyclone, excess rainfall, earthquake and fisheries parametric product range.
The European Union (EU) under its Global COVID-19 Response, has provided a grant of €10 million (US$11 million) to CCRIF to provide additional premium support for increasing coverage for the Caribbean risk transfer buyers.
This additional funding helped to provide a further discount for member coverage, which it seems many have used to expand their coverage under the parametric insurance facility.
As the risk pool of the CCRIF grows, it also benefits all of its members by enabling economies of scale in the reinsurance market to be realised when buying protection for its parametric risk pool.
Ultimately, that helps to keep the cost of capital lower, which cascades down to benefit the CCRIF members as well.
Overall coverage increased by some 8% among the Caribbean members of CCRIF.
Daniela Tramacere, EU Ambassador to Barbados, the Eastern Caribbean States, OECS and CARICOM/CARIFORUM, commented, “Mitigation of COVID-19 impacts ahead of the hurricane season that already started in the region requires extraordinary and coordinated measures. EU is strongly committed to stand together with its partners in the Caribbean, providing emergency support and participating in the social/economic recovery process. The €10 million support has been provided to CCRIF SPC to ease payment of member countries’ premiums and improve their risk coverage against natural hazards.”
CCRIF CEO, Isaac Anthony added, “I must use this medium to openly thank the European Union for its rapid response in support of our member countries at a time when they are grappling with significantly diminished financial resources due to the economic crisis posed by COVID-19. I also take the opportunity to thank the GFDRR and the World Bank for facilitating this timely assistance to Caribbean countries as part of their wider response to the COVID-19 crisis in the region.”
Since its launch in 2007, the CCRIF has made 41 parametric insurance payouts totalling US $152 million to 13 of its 22 member governments, when tropical cyclone, earthquake and/or excess rainfall policies were triggered, with all payouts being made within 14 days of the disaster event.
CCRIF also has three members in Central America that have purchased parametric coverage for tropical cyclone, earthquake and excess rainfall.
This helps to diversify the risk pool somewhat, which again adds to the efficiencies when CCRIF comes to visit the reinsurance market for its own risk transfer.
CEO Anthony said, “The truth is what we do at CCRIF is about supporting governments to help their populations – communities, businesses and key sectors such as education, agriculture, and tourism. An assessment of the beneficiaries of CCRIF’s payouts show that over 2.5 million persons in the Caribbean and Central America have benefitted directly and/or indirectly from these payouts after a natural disaster.”