The CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility) is set to grow its risk pool again with the addition of a new member in St. Maarten, which takes the number of members of the facility to 20 countries – 19 Caribbean governments and 1 Central American government.
Each time the CCRIF risk pool grows the support it receives from global reinsurance market also increases, as much of the risk is reinsured through a robust program in the global market.
In joining the CCRIF, St. Maarten has purchased parametric insurance coverage for tropical cyclones, earthquakes and excess rainfall.
St. Maarten was severely impacted by Hurricane Irma in September 2017 and the storm caused economic damage estimated by its Government at over US $1.8 billion.
It’s clear that a source of parametric protection that can payout quickly and is backed by global reinsurance capital will be beneficial to St. Maarten when the next hurricanes come through.
CCRIF made payouts totaling US $55 million to 9 member governments after the impacts of 2017’s hurricanes Irma and Maria. Since the facilities inception in 2007 it has made 36 payouts totalling US $130.5 million to 13 member governments.
Impressively all of these payouts have been made within 14 days of the loss event occurring, a key selling point for the CCRIF’s parametric products.
The CCRIF explained, “It is the parametric nature of CCRIF’s policies that enables rapid payouts against losses estimated in a catastrophe risk model (which can provide such estimates almost instantaneously). These payouts allow governments to reduce their budget volatility and to provide capital for emergency relief as well as assistance to the affected population and restore critical infrastructure and homes. While these payments are relatively small compared to the overwhelming cost of rebuilding, this rapid infusion of liquidity allows our members to address immediate priorities and reduce post-disaster resource deficits.”
It is also the efficiency of reinsurance pricing currently that helps to make CCRIF products more viable as well, as the lower pricing in catastrophe reinsurance markets seen in recent years helps the facility to keep costs down for member governments.
The ILS market has assisted here, with some participation in the CCRIF reinsurance program at times, and through the general efficiency that the capital markets has forced on reinsurance capital overall.
CCRIF CEO, Mr. Isaac Anthony said, “We are pleased to welcome St. Maarten as a new member to CCRIF and look forward to working with the Government of St. Maarten to strengthen its disaster risk management framework in the face of increasing climate-related risks.”