The Inter-American Development Bank (IDB) and reinsurer Swiss Re are working on a catastrophe insurance facility for Caribbean country the Dominican Republic. The project to establish this cover has been ongoing for a year or more as the IDB worked with various third parties to establish the best way to secure natural disaster cover for member countries.
Reuters have reported that it is an insurance-linked security type platform that is being developed. The transaction is said to be worth $100m of cover, split into two with $50m providing cover for earthquake risks and $50m covering hurricane risks.
The policy will run for five years and will be issued by a special purpose insurer set up specifically for this deal, some of the risk will be transferred to either reinsurers or the capital markets. Any payout from the policy will be determined by actual severity and location of an earthquake or hurricane. Cover is expected to be in place in time for the start of the Atlantic hurricane season.
We’ll bring you more details on this new catastrophe insurance facility when we have them.