The Caribbean Catastrophe Risk Insurance Facility has announced that the earthquake which struck Haiti yesterday was sufficiently severe to trigger the full policy limit for their earthquake coverage. Haiti has paid $385,500 for it’s cover and will receive a payment of $8m after the standard 14 day waiting period the facility enforces. That’s a much faster payout than through normal types of insurance cover which after events like this is essential.
The $8m will of course be extremely useful after such a devastating disaster, however it’s not really very much in the greater scheme of things. It really seems that cat bonds are a better way to provide cover to countries at risk of natural disasters with models such as the MultiCat scheme in Mexico leading the way. Payouts under a scheme such as MultiCat would be much higher, of course the premium paid would also be more but schemes like that do seem to offer more flexibility to countries at risk.
The full press release from the CCRIF is below.
CCRIF Ready for Haiti Payout after Earthquake
11am EST, January 13, 2010 – The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is preparing to make a payout to the Government of Haiti as a result of the Magnitude 7.0 earthquake which struck close to Port-au-Prince, Haiti yesterday. Haiti has an earthquake policy with CCRIF as part of the country’s disaster risk management strategy. The recent earthquake was of sufficient magnitude to trigger the full policy limit for the earthquake coverage, effecting payment after a 14-day waiting period. Based on calculations from the preliminary earthquake location and magnitude data, Haiti will receive just under US$8M – approximately 20 times their premium for earthquake coverage of US$385,500.
Parametric catastrophe coverage is only one way in which the Facility is assisting the Caribbean region to become disaster resilient. CCRIF works with partner organisations such as the Caribbean Institute for Meteorology and Hydrology (CIMH) and the Caribbean Disaster and Emergency Management Agency (CDEMA) to provide data and other technical assistance for better planning for, response to, and recovery from natural catastrophes. CIMH is currently running detailed weather forecast models over Haiti to identify those watersheds that may receive heavy rainfall and would be prone to flooding, in particular flash flooding. This will address the probability of landslides and flooding in the areas that have been affected by the earthquake and will facilitate proactive action.
CCRIF is hopeful that the rapid payment of funds under Haiti’s policy will assist the Government and people of Haiti in addressing immediate needs as they begin the recovery and rebuilding process. The sympathies of all of the Board and operational team at CCRIF are with the people of Haiti at this time.