CCRIF & WFP link parametric insurance with social protection in Dominica

The CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility) has teamed up with the United Nations World Food Programme (WFP) to link its parametric disaster insurance payouts with social protection systems in Dominica.

Treated as a pilot project, the idea is to link the deployment of social protection funding with the parametric disaster insurance payouts that CCRIF provides, to harmonise the disbursement of capital after a catastrophe strikes.

The UN’s WFP and the Government of the Commonwealth of Dominica have signed an agreement to link social protection systems to the CCRIF payouts, in order to deliver assistance to the most vulnerable more readily after a climate shock occurs.

“Through this pilot project, WFP has strengthened the Government of Dominica’s access to disaster risk financing,” explained Denise Edwards, Acting Finance Secretary of Dominica. “We welcome this initiative as we strive to build the financial resilience of the vulnerable against disasters and hazardous impacts.”

The WFP is providing US $300,000 of funding over a two-year period, which will go towards paying Dominica’s premium for its CCRIF SPC Tropical Cyclone parametric insurance policy for the 2021/22 and 2022/23 policy years.

With this funding support, a portion of the parametric insurance payouts will in future be disbursed through national social protection programmes after a tropical cyclone or hurricane occurs.

As a result, rapid cash payments could be made direct to affected people, through which it is hoped recovery can be speeded up and capital delivered to those who need it most after disasters.

“This assistance will also allow the government to meet its parametric insurance coverage for tropical cyclones. We express our profound gratitude to WFP as we continue to partner and collectively contribute to Dominica’s sustainable development goals,” Edwards said.

Isaac Anthony, Chief Executive Officer of CCRIF SPC, added, “We are pleased to see the linkages between CCRIF SPC’s payouts and social protection in action. We view this WFP initiative as innovative, and we are pleased to be a part of it, to enable timely and efficient assistance to those most in need following a natural disaster in keeping with the principle of leaving no one behind.”

Importantly, Anthony said that by delivering some of the payout through social protection systems, it facilitates and vertical and horizontal expansion of the system, while demonstrating that parametric triggers can make social protection systems more responsive to shocks as well.

Regis Chapman, the Country Director and Representative of the WFP Caribbean office, also said,  “WFP is honoured to be a chosen partner in this bold and innovative step taken by the Government of Dominica. This effort will improve national preparedness and disaster risk management efforts and put Dominicans at the centre of response and recovery efforts in times of crisis.”

Initiatives that create a direct link between disaster risk financing and social protection is increasingly being seen around the world, as countries look to direct capital and payouts to those most in need, and make disbursement more responsive to the actual climate shocks that occur.

In time, we could see more social protection delivered in-line with insurance, triggered by parameters based on the occurrence of specific disasters, or the declaration of a state of emergency.