At this year’s renewal of member country policies for the CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility), some have elected to split coverage across multiple policies, enabling them to better calibrate or target their parametric disaster insurance protection.
At the renewals this year, members of the CCRIF renewed an expanded parametric disaster insurance risk pool of over $1 billion.
The CCRIF SPC provides parametric disaster insurance protection to Caribbean and Central American nations, covering perils including tropical storms, earthquakes, excess rainfall, among others.
Acting as a risk pooling facility, the CCRIF assumes parametric disaster risk exposure from members, enabling efficiencies based on diversification and then leveraging the global reinsurance and capital markets for risk transfer to ensure it can pay claims when policies are triggered.
Member governments in the Caribbean ceded more than $1 billion of risk to the CCRIF SPC this year, purchasing coverage from its tropical cyclone, excess rainfall, earthquake and fisheries parametric product range.
Some of those elected to expand coverage, some to hone it and target the parametric triggers more closely to match their unique geographies.
Overall coverage increased by 8% at this year’s CCRIF renewal, as CCRIF’s 22 members – 19 in the Caribbean and 3 in Central America – purchased a total of 61 parametric insurance policies from the Facility.
22 tropical cyclone policies, 15 earthquake policies, 22 excess rainfall policies and 2 COAST policies for fisheries sectors were purchased at the renewal, an increase of two policies compared with 2019/20.
The Bahamas and Trinidad & Tobago have elected to split policies to provide coverage more closely matched with their unique situations, which should mean the parametric triggers are more closely aligned with their geography.
The Bahamas already had more than one tropical cyclone and excess rainfall policy, each covering a portion of the archipelago.
But at this latest CCRIF renewal, the Bahamas government elected to split the northwest region into two smaller regions for the excess rainfall policy, so now the country has three tropical cyclone policies and four excess rainfall policies.
This should help the parametric policies respond to more localised events, while a major tropical storm or hurricane could trigger multiple of them to provide more coverage as well.
Trinidad & Tobago has elected to purchase two tropical cyclone and excess rainfall policies, a policy for each island, at this renewal. Last year there was one single tropical cyclone policy for the whole country.
Again, this should calibrate the parametric protection more closely to the countries make-up, increasing the chances of the policies being triggered but also providing more robust protection.