Hurricane Maria has triggered the Caribbean island of Dominica’s parametric insurance coverage from the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), resulting in a payout to the country of almost US $19.3 million.
It’s the latest payout the CCRIF is set to make due to the severe 2017 hurricane season, having already paid $31.2 million to Caribbean governments due to the impacts of hurricane Irma.
This takes the CCRIF’s total payouts for the hurricane season to around $50.7 million so far and its payouts since the parametric insurance facilities launch to approximately $120 million.
Being parametric in nature the insurance policies can settle quickly, with payment typically available to governments of countries hit by hurricanes or tropical storms in two weeks after the event, which is often faster than disaster aid can arrive.
This provides quick liquidity enabling the capital to be put to work in disaster relief and reconstruction after an event, either a tropical cyclone, earthquake or excess rainfall
Dominica will receive a payout of US$19,294,800 under its parametric tropical cyclone policy following the passage of Hurricane Maria on September 19th, with payout set to be in less than 14 days of the hurricane.
Dominica also holds a parametric excess rainfall policy with CCRIF and the facility is currently assessing whether that policy was triggered as well.
CCRIF CEO Isaac Anthony commented; “While we are saddened by the devastation from both tropical cyclones Irma and Maria, we continue to be pleased to support our member countries in their time of need and are encouraged by the annual renewal of policies by our members. This provides some strong evidence that our model is a benefit to the region as well as a template that can be adopted and adapted by other regions of the world.”
The CCRIF is backed by reinsurance capital, with its pooling of risk and single approach to the risk transfer markets able to help it reduce the costs of coverage for Caribbean governments.
Following the 2017 hurricane season, the CCRIF may find the reinsurance markets get a little more expensive at its next renewal, but it could look to the ILS market and collateralised sources of reinsurance as an alternative source of efficient risk capital.