The CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility) along with the World Bank have announced the issuance of the first two parametric insurance policies covering the fisheries industry.
The new Caribbean Oceans and Aquaculture Sustainability FaciliTy (COAST) fisheries parametric insurance policy has been issued to two of the CCRIF’s member governments, Grenada and Saint Lucia.
It is designed to protect the fisheries sector, enabling those working in it to recover quickly after severe weather-related events.
Funding for the launch of COAST has been provided by the U.S. State Department.
The Facility said that the successful launch of the fisheries sector parametric product “reinforces CCRIF’s commitment to meeting the needs of the region.”
It explained that while governments purchase the parametric cover, it has a unique livelihood protection component akin to microinsurance as well as a tropical cyclone coverage component that is sovereign risk transfer.
It provides coverage for losses caused by “bad weather” suffered by fishing sector workers, as well as for direct damages caused by tropical cyclones (wind and storm surge) to fishing vessels, fishing equipment and fishing infrastructure.
“Bad weather” is defined as the occurrence of high waves and heavy rainfall throughout the parametric policy year.
It’s the first ever parametric risk transfer product for this usage, that provides this dual protection of the workers in a sector as well as their infrastructure as well.
Payouts are decided based on a pre-defined level of wave height, rainfall, wind or storm surge and their impact, with the CCRIF aiming to make payouts within its 14 day typical window.
After a COAST parametric insurance policy is triggered, funds will be provided by CCRIF to the covered country Ministry of Finance, and then paid to the fisherfolk and other affected parties throughout the country’s fishing industry.
Potential beneficiaries are defined at the time of policy inception by the covered government from the fisheries value chain, including fishers, crew members, captains, boat owners, fish vendors and processors, etc.
COAST was developed with the support of the U.S. State Department, and the implementation was led by the World Bank and CCRIF.
As with other CCRIF parametric products, as it rolls out COAST will be backed by reinsurance capital to support the facility and is another sign of the potential growth to come from the CCRIF’s risk pool.
As we reported recently, that risk pool grew by over 14% in a year and is now nearly $1 billion in size, requiring growing reinsurance support as a result.
The way this parametric insurance product has been structured is pioneering and provides an example of a dual-protection for a sector and its workers’ livelihoods that could be rolled out elsewhere and for other industry’s.
It’s a good example of where parametric coverage really comes into its own and as it scales with the support of reinsurance capital this product design model could become a meaningful enhancement to the resilience of people in many climate and weather exposed regions of the world, developing and developed.
The CCRIF also has additional products in development targeting the agriculture and public utilities sectors.
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