The Progressive Liberal Party administration, the former government of The Bahamas, cost the country around $32 million in insurance payouts from Hurricane Matthew as it failed to renew its CCRIF SPC policies for 2016/2017, according to Prime Minister, Dr. Hubert Minnis.
The Bahamas had been a member of the parametric catastrophe insurance facility, the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), since its inception in 2007.
However, failure by the former government to make the annual $900,000 payment to the facility for the 2016/2017 year meant the region failed to qualify for payouts of around $32 million following the impact of hurricane Matthew, said Prime Minister Dr. Hubert Minnis, speaking at the 2017/2018 Budget Communication debate, as reported by The Bahama Journal.
According to reports, the payout would have been the highest ever made by the CCRIF SPC, at roughly $32 million.
“Thirty-two million is an extraordinary amount of money that could have been used for so many good purposes. Instead, these millions were wasted by a dysfunctional government. It is shameful. It’s disgraceful. I remember when the former minister of state claimed in the house that The Bahamas would never be able to take advantage of this facility. This was an irresponsible and untrue statement,” said Prime Minister Minnis.
After hurricane Matthew devastated parts of the Caribbean, the CCRIF SPC paid out $29.2 million, just 14 days after the event, to member countries Haiti, Barbados, Saint Lucia, and St. Vincent & the Grenadines. The rapid payout shows how beneficial a parametric trigger structure can be for vulnerable, poorer countries when disaster strikes, as typical insurance protection often takes too long to reach those in need post-event.
And according to Prime Minister Minnis, as reported by The Bahamas Journal, a letter from the Chief Executive Officer (CEO) of the CCRIF SPC states that had the region renewed its tropical cyclone policy for the relevant year, it would have received a substantial, and hugely beneficial payout from the facility.
According to reports, the letter said; “We are pleased that the government purchased tropical cyclone (hurricane) policies every year between 2007 and 2014 and also purchased policies for both tropical cyclones and excess rainfall for the 2015/2016 policy year. However, we deeply regret that the government decided not to renew its CCRIF policies for the 2016/2017 year.
“Based on the registered losses, it means that had the government of The Bahamas renewed its tropical cyclone policy for 2016/2017, using the previous year’s policy conditions (attachment point, exhaustion point and premium), the policy would have triggered, resulting in a payout of approximately $31.8 million – equal to the coverage point.”