The CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility) has expanded its risk pool by 10% year-on-year, as its member governments renewed $1.2 billion of parametric insurance coverage against catastrophe, climate and seismic perils.
Parametric insurance cover has been renewed by Caribbean and Central American governments for tropical cyclones, excess rainfall and earthquakes, as well as the newer fisheries sector product from the CCRIF, all for the policy year 2022/23, which began on June 1st 2022.
In total, members ceded US $1.2 billion of risk in parametric form for their earthquake, tropical cyclone and excess rainfall policies.
That’s a 10 percent increase on the prior year and sees the CCRIF risk pool reaching its largest size to-date, which is positive for its ability to generate greater reinsurance efficiencies for its members, especially in the harder global reinsurance market.
Thirteen Caribbean member governments increased their coverage compared with the 2021/22 policy year, the CCRIF explained.
Adding that this illustrates “that countries continue to recognize the critical importance of financially protecting their economies against natural disasters, especially in the context of the increasing frequency and intensity of natural hazards.”
Additional grant funding has been made available to help CCRIF members renew their coverage.
The World Bank, in partnership with the European Union (EU) through its Caribbean Regional Resilience Building Facility (CRRB) managed by the Global Facility for Disaster Reduction and Recovery, made grant funding available to CCRIF SPC to support eligible Caribbean countries.
The World Bank, alongside the EU, Germany (through KfW Development Bank and Federal Ministry of Economic Cooperation and Development (BMZ)) and the United States Treasury (UST), through the Central America and the Caribbean Catastrophe Risk Insurance Program, supported Central American members.
At the renewal, CCRIF offered members the option to reduce the cost of their policy premiums or to increase coverage, or both, by roughly 11 per cent for tropical cyclone policies and 24 per cent for excess rainfall policies for the Caribbean and 15 to 30 per cent to Central American members.
CCRIF also provided discounts as another incentive to increase coverage, including a discount to members on any increased parametric coverage over the previous policy year (2021/22) for tropical cyclone and earthquake policies.
Also, The World Bank provided premium support to pilot countries Grenada and Saint Lucia for a fourth year for their 2022/23 fisheries COAST policies.
Positively for future risk pool growth, CCRIF said it is still working with the Caribbean Electric Utility Services Corporation (CARILEC) for the rollout of an electric utilities focused parametric insurance product, its first pure-commercial cover.
CCRIF made payouts to three members during the 2021/22 policy year, US $40 million to the Government of Haiti after the earthquake in August 2021, its largest payout to date, and payouts to Barbados after Tropical Cyclone Elsa and Trinidad and Tobago following heavy rains in August 2021.
Since 2007 when it launched, the CCRIF has made a total of 54 payouts to 16 member governments, totalling approximately US $245 million, with every payment made within 14 days of the event.