The CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility), has announced the launch of its sixth parametric insurance product line, as a new segregated account has been established to warehouse parametric risk from insurance policies sold to water utilities.
As we recently reported, CCRIF had already on-boarded three electrical utility customers for a parametric insurance product specifically designed to meet their needs.
That’s on top of the 63 other parametric insurance policies that CCRIF renewed, across its Tropical Cyclone, Excess Rainfall, Earthquake and COAST (fisheries) products.
Now, CCRIF has launched parametric insurance for water utilities in the Caribbean, to cover them against extreme weather events such as hurricanes, tropical storms, and excess rainfall events.
The Caribbean Water Utility Insurance Collective (CWUIC) has been set up as a segregated portfolio within CCRIF, adding another diversifying element to the overall parametric risk pool.
Over a two year period, the water utility product has been in development, with the support of the Inter-American Development Bank (IDB), offering technical and financial support, while CCRIF undertook the modelling work to develop an insurance model to underpin the parametric trigger and coverage of the water utilities insurance product.
Grant funding helped to get the new parametric insurance through its development, while the UK Foreign, Commonwealth and Development Office (FCDO) also provided $25 million of development aid to capitalise the segregated portfolio to warehouse the water utility risk.
That funding will be used alongside reinsurance to protect the CWUIC SP against unexpected losses from policy claims, CCRIF said.
CCRIF CEO, Isaac Anthony commented, “CWUIC benefits from CCRIF’s 16-year experience of offering parametric insurance policies to provide coverage against natural hazards to governments as well as Caribbean electric utility companies. With CWUIC, CCRIF continues to leverage its state-of-the-art parametric insurance base models – tropical cyclone and excess rainfall – to produce models and products for key economic sectors that are usually not able to access affordable insurance coverage against natural hazards.”
UK Minister for the Americas and Caribbean David Rutley added, “The people of the Caribbean are on the frontline of natural disasters, which are increasing in frequency due to climate change. This first-of-its-kind scheme will enable Caribbean countries to maintain essential services in the face of storms and floods, while greatly reducing the financial burden on individual governments. The UK is determined to play its part in helping small island developing states build resilience to extreme weather events with access to fairer and reliable funding.”
Caribbean Development Bank Vice President of Operations, Isaac Solomon also commented, “The story of CWUIC SP’s development is one of donor collaboration in response to an expressed demand from utilities and endorsed by regional governments. CDB has been an integral part of the Working Group that designed and established CWUIC SP, acknowledging that the water utilities in all our Borrowing Member Countries (BMCs) should have access to this facility. For this reason, CDB has committed additional resources to extend the analytical work required to provide coverage to all BMC water utilities. CDB believes that CWUIC SP is uniquely positioned to change the lives of Caribbean people by enabling water utilities to maintain business continuity following a natural disaster – a time when the role of water becomes critical to clean-up efforts, healthcare and basic human needs.”