The Caribbean Development Bank (CDB) and Government of Canada have partnered to fund the CCRIF parametric insurance premiums of nine Caribbean countries, enabling them to continue with coverage despite the fiscal impacts from the Covid-19 pandemic.
Canada is financing a new CAD$20 million fund to support the premium needs of the countries, the Canada-CARICOM Climate Adaptation Fund (CCAF), with the CDB providing in-kind contribution valued at CAD$ 1.2 million.
The eligible countries are all CDB Borrowing Member Countries (BMCs) and those set to receive premium assistance are Antigua and Barbuda, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Vincent and the Grenadines and Suriname.
The goal is to help these countries maintain their disaster risk management efforts, even with their national finances stretched by the demands of responding to the COVID-19 pandemic.
The nine countries will have their Caribbean Catastrophe Risk Insurance Facility (CCRIF) parametric disaster insurance premium payments for either the 2020-21 or 2021-22 risk periods, covered by the fund.
CDB’s Director of Projects Daniel Best commented, “We know the ongoing COVID-19 pandemic has been placing severe pressure on BMCs’ public finances which could redirect resources away from planned investments in climate resilience. We are also conscious that the Caribbean is vulnerable to natural disasters; so it is equally critical that countries remain adequately protected against disaster risk. We appreciate the intervention of the Government of Canada which recognised this and quickly stepped up to support Caribbean countries in maintaining their ongoing disaster risk reduction and climate resilience efforts.”
The CCRIF helps Caribbean countries access disaster insurance that might otherwise have been unaffordable, through the use of techniques including parametric trigger design, risk-pooling, as well as the resulting efficient access to reinsurance and capital markets.
As a result, countries buying parametric policies from CCRIF enjoy catastrophe risk insurance costs that are some 40-50% lower than they would have paid if trying to negotiate directly with insurance or reinsurance markets on their own.
CCRIF has made an estimated US $156 million in payouts to 14 members, all within the guaranteed 14 days of an insurable event occurring.
As we recently reported, the CCRIF SPC (formerly known as the Caribbean Catastrophic Risk Insurance Facility) is also set to extend discounts on premiums and other coverage benefits to certain of its members with the support of the World Bank, to assist them in continuing with their parametric disaster insurance protection, even despite the fiscal hits from Covid-19.