The Government of Nicaragua will receive a US $10.7 million payout after recent major hurricane Eta triggered its parametric tropical cyclone insurance policy with the CCRIF.
The CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility) provides a range of parametric catastrophe insurance products to the Caribbean and Central America region, including for the peril of tropical cyclone.
Hurricane Eta became the strongest storm of the 2020 Atlantic tropical season before it made landfall in Nicaragua, causing significant damage and devastation.
Now, the Government of Nicaragua will benefit from its parametric insurance protection, with an advance of US $3.7 million already paid out by CCRIF and the remainder due by November 19th.
CCRIF makes all its payouts within 14 days of the catastrophe event occurring, only possible due to the parametric nature of the insurance policies.
Nicaragua’s Minister of Finance and Public Credit, His Excellency Iván Acosta commented, “We want to extend our recognition for the excellent work by the team of CCRIF SPC, for their effectiveness in their mission to serve the peoples of Central America and the Caribbean in their moments of greatest need, such as when they face a climatic or catastrophic event.”
Nicaragua will now have received three payouts from its parametric insurance coverage from the CCRIF, having received US $1.1 million after tropical cyclone Otto in November 2016 and another US $500,000 for an earthquake in June of that year.
Nicaragua was also hit yesterday and through today by hurricane Iota, which also became a major storm and may have taken the record for being the most intense Atlantic storm landfall of the year from Eta.
There is a strong chance that Nicaragua receives a second payout from the CCRIF for that hurricane as well, which has impacted a similar area to Eta.
CCRIF CEO Isaac Anthony, stated, “CCRIF extends sympathies to the Government and people of Nicaragua for the losses incurred due to Tropical Cyclone Eta and as well as to our other member governments and other countries that were impacted by this event. The Facility stands ready to support the governments affected in their immediate recovery and longer-term rehabilitation efforts.”
By pooling regional natural catastrophe risks and leveraging the global reinsurance markets, CCRIF can pass on more efficient parametric insurance products to governments in the region.
These coverages have proved invaluable in helping countries recover from major catastrophe events and in the case of Eta and also Iota Nicaragua will find the injection of capital so quickly after the event a benefit to its recovery and relief efforts.
Diversification within the CCRIF risk pool remains critical in how efficient its use of reinsurance capital is, but as the risk pool grows so too do CCRIF’s options for tapping into new and alternative reinsurance capital sources and structures, to the benefit of the government risk transfer buyers in the Caribbean and Central American region.