CCRIF members cede over $1bn for second successive year
Member governments of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) have ceded over $1 billion in risk to the facility for the second year in a row.
CCRIF members renewed their parametric insurance coverage for tropical cyclones, excess rainfall, earthquakes and the fisheries sector ahead of the upcoming 2021 Atlantic Hurricane Season.
CCRIF’s first non-government member, ANGLEC, Anguilla’s electric utility company, increased its coverage. ANGLEC joined CCRIF in 2020, purchasing the newest product that offers coverage for electric transmission and distribution systems.
CCRIF started operations in 2007 with 16 Caribbean member governments and just under $500 million in coverage for tropical cyclones and earthquakes. Since then it has expanded its offering, to five parametric insurance products for 23 members, including 19 Caribbean governments, three Central American governments and one electric utility.
COVID-19 has hit CCRIF’s members hard and the recovery is expected to be slow, with some estimates projecting it may last until 2024. Meanwhile, the US National Oceanic and Atmospheric Administration (NOAA) is predicting another active Atlantic hurricane season, although it is not expected to match the historic level of storm activity seen in 2020.
Isaac Anthony, chief executive officer of CCRIF, said the facility aims to offer insurance products that are not readily available in traditional insurance markets. “These parametric insurance products allow governments to have access to liquidity within 14 days of an event,” he explained. “This is key as it helps governments reduce budget volatility after a natural disaster, support the most vulnerable in their population and begin the process of recovery in short order.”
Anthony thanked CCRIF’s development partners, including the European Union (EU) and the Government of Canada, for supporting the facility early in the pandemic to help offset policy premiums for 2020/21 and 2021/22.
The EU provided a grant of €10 million ($12 million) to CCRIF under its Global COVID-19 Response for premium support or for members to increase coverage. It meant each Caribbean member country received a 26 percent discount on total gross premium, or an increase in policy coverage under their CCRIF parametric insurance policies. Some members used a portion of the discount in the 2020/21 policy year, leaving a portion for use during the 2021/22 policy year.
In 2021 the EU provided additional financial support of €262,000 through the €3 million Technical Assistance Program for Disaster Risk Financing in Caribbean Overseas Countries and Territories (OCTs), for the delivery of training activities to selected OCTs to better understand CCRIF products and services.
Meanwhile, nine Caribbean countries – seven current CCRIF members – received a total of $12.4 million under the Canada-CARICOM Climate Adaptation Fund. Antigua and Barbuda, Belize, Dominica, Grenada, Jamaica, Saint Lucia, and St. Vincent and the Grenadines used their allocation to cover a portion of their premium costs for their CCRIF parametric insurance policies. Guyana and Suriname, which are not members of CCRIF, could use their allocations towards their participation fees and premium support when they join the facility.
The World Bank provided premium support to pilot countries Grenada and Saint Lucia for a third year for their 2021/22 COAST policies for the fisheries sector, which were first offered in 2019.
CCRIF’s Central American members also received special benefits as part of CCRIF’s response to the COVID-19 pandemic, totalling $11 million, including a reduction in premium costs on their parametric insurance policies or an increase in CCRIF coverage. This effort was supported by the Multi-Donor Trust Fund (MDTF) of the Catastrophe Risk Insurance Program of Central America and the Caribbean, administered by the World Bank.
During the 2020 hurricane season CCRIF made eight payouts due to tropical cyclones Cristobal, Laura, Zeta, Eta and Iota totalling $48 million to six member governments on their tropical cyclone and/or excess rainfall policies. Since CCRIF’s inception in 2007 it has made a total of 50 payouts to 16 of its member governments, totalling approximately $200 million, all within 14 days of the event.
CCRIF was formed as the first multi-country risk pool in the world and was the first insurance instrument to successfully develop parametric insurance policies for natural catastrophes.
