The CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility), a parametric focused risk pooling and transfer facility for the Caribbean and Central America, is targeting further expansion in terms of its scope, as well as in terms of the range of risk transfer products it offers and to whom.
The CCRIF began as a parametric risk transfer pool for Caribbean island nations, offering just tropical cyclone and earthquake insurance protection and leveraging the economics of pooled risks and the global reinsurance market to make its products efficient for sovereigns in the region.
It expanded to also offer parametric extreme rainfall cover and included Central American governments among its protection buyers, as it sought to benefit from increased scale and diversification within the risk pool it had created.
Further expansion of remit and reach has since occurred, with a fisheries specific insurance product, as well as, most recently, a new parametric insurance offering for utilities providing protection to utilities against transmission and distribution losses due to hurricanes, the CCRIF’s first venture into providing insurance to private entities.
Now, the CCRIF SPC is beginning its planning for the next few years and is seeking consulting support to help it establish a feasibility study, roadmap and plan for further expansion.
CCRIF said that it is currently planning two new parametric insurance products, for drought and agricultural risks, as well as a rainfall run-off model, which we assume would enable risk transfer products focused on extreme rainfall related flood.
CCRIF said it is also exploring bringing parametric insurance products to market for health, education and housing industries.
A new strategic plan will be created focused on 2021 – 2024 and beyond, the CCRIF said, through which the Facility wants to “assess the expanded role it can or should play in the disaster risk management landscape across the Caribbean and Central American regions as it works collectively with other development partners and governments to advance the resilience agenda of the region.”
The CCRIF wants to look at innovative risk financing tools, including resilience bonds, as well as other instruments that can be used to help build resilience in its target region.
It also wants to expand its work with the private sector, to offer parametric insurance products such as microinsurance products or hybrid products or capital markets instruments.
A further expansion of parametric insurance products will also be assessed, while the potential for the CCRIF to have a mandate beyond parametric insurance will also be looked at in the feasibility study, including looking at the regulatory and institutional requirements for this.
It’s good to see the CCRIF looking to plan for further growth, as by growing its risk pool the facility can tap greater reinsurance efficiencies and also expand its usefulness in the regions it covers, helping to close the still gaping protection gaps in the Caribbean, Central America and perhaps even further afield.