Hurricane Irene could cause Caribbean Catastrophe Risk Insurance Facility payouts

Hurricane Irene continues to make her way across the Caribbean showing no sign of decreasing in size or strength. In fact just the opposite, hurricane Irene looks set to intensify further and grow in size as she crosses the warm waters of the northern Caribbean heading straight for the Turks & Caicos islands and the Bahamas.

Hurricane Irene is currently a Category 2 storm with maximum sustained winds of 100mph and hurricane force winds above 74mph extending outwards up to 50 miles from the storms centre. The atmospheric pressure in the centre of Irene has been dropping and the latest reports show a minimum central pressure of 977mb, that suggests intensification will continue.

On her current path Irene will pass through the Turks & Caicos islands later today and overnight then through the Bahamas over the course of Wednesday night and Thursday. Both sets of islands are at risk of receiving a severe blow from Irene and preparations are being made to protect property and lives. Damaging winds are not the only threat to these islands as hurricane Irene threatens to inundate low-lying areas with a storm surge as high as 9 to 13 feet above normal tide levels. Torrential rains will also impact the islands with isolated amounts of up to 10 inches possible over the Bahamas and Turks & Caicos islands.

Both the Bahamas and the Turks & Caicos are members of the Caribbean Catastrophe Risk Insurance Facility (CCRIF), a non-profit multi-country risk pooling facility providing parametric hurricane and earthquake cover to Caribbean countries. We’re unsure what the specific attachment and exhaustion points are on the policies that cover the Bahamas and Turks & Caicos islands,  but there has to be a distinct possibility of the CCRIF facility being triggered by a storm of the magnitude of hurricane Irene.

In the past the CCRIF have made payouts for a number of hurricanes and tropical storms which impacted their Caribbean island policyholders, including the Turks & Caicos receiving $6.3m in 2007 from hurricane Ike, Anguilla receiving $4.28m after hurricane Earl in 2010 and tropical storm Tomas triggering $12.8m of payments to Barbados, St Lucia and St Vincent and the Grenadines in 2010.

Payments to islands whose CCRIF policies are triggered are usually made within about two weeks of the event itself, thanks to the parametric measurement used to quantify whether an event qualifies or not. This speedy payout mechanism is vital to help the Caribbean nations recover after potentially devastating natural catastrophe events.

We will continue to update you on hurricane Irene’s progress and you can see the storms current position and strength at any time over on our 2011 Atlantic Hurricane Season page.