CCRIF Member Governments Purchase US$1.2 Billion in Catastrophe Risk Insurance Cover for 2022/23 Against Climate-Related and Seismic Risks – World

Grand Cayman, Cayman Islands, July 29, 2022. The CCRIF SPC is pleased to announce that its Member Governments have renewed their parametric insurance coverage for Tropical Cyclones, Excessive Rainfall and Earthquakes, and the Utilities sector. fisheries for the 2022/23 policy year, which began June 1, 2022. For earthquake, tropical cyclone and excessive rainfall policies, members ceded more than $1.2 billion of coverage, an increase of 10% over the previous year. Thirteen member governments have increased their coverage compared to the 2021/22 policy year. The renewal and demand for increased coverage by members illustrates that countries continue to recognize the critical importance of financially protecting their economies against natural disasters, particularly in the context of the increasing frequency and intensity natural hazards.

CCRIF continued to work with development partners to explore opportunities to help its members maintain and increase coverage. The World Bank, in partnership with (i) the European Union (EU) through its Caribbean Regional Resilience Building Facility (CRRB) managed by the Global Facility for Disaster Reduction and Recovery, has making additional grants available to CCRIF SPC to support eligible Caribbean countries; and (ii) the EU, Germany (through the KfW Development Bank and the Federal Ministry for Economic Cooperation and Development (BMZ)) and the United States Treasury (UST), through the intermediary of the Catastrophe Risk Insurance Program in Central America and the Caribbean, have made an additional grant available. funding to CCRIF SPC to support members in Central America.

For the 2022/2023 insurance year, and thanks to the support of development partners, the CCRIF has offered its members the possibility of reducing the cost of their insurance premiums or increasing the coverage or both of approximately 11% for tropical cyclone policies and 24% for excessive precipitation policies for the Caribbean and 15-30% for Central American members. In addition to this support, CCRIF has also offered discounts to its members as an incentive to increase coverage, including a discount to members on any increased coverage from the previous policy year (2021/22) for policies against tropical cyclones and earthquakes.

In previous years, the CCRIF SPC has offered similar discounts to its members as part of its support for member governments’ response to the COVID-19 pandemic. For example, for the 2020/21 and 2021/22 policy years, the CCRIF SPC, with support from the EU CRRB and the Central America and Caribbean Catastrophe Risk Insurance Program, has could give countries the option of increasing coverage or reducing premium payments by up to 23% for the Caribbean and up to 50% for Central America.

In addition, CCRIF provides annual sales rebates and incentives to its members, given that it operates as a development insurance company, and has a strong stake in its members’ ambitions to advance the sustainable development, recognizing that parametric insurance coverage is essential to reduce budget volatility. following natural disasters.

In addition, the World Bank provided premium support to pilot countries Grenada and Saint Lucia for a fourth year for their COAST 2022/23 policies. COAST is designed to support the fishing industry and fishers following climate-related disasters. The World Bank has been providing premium support to these two countries since the introduction of COAST in 2019.

CCRIF’s value to its members is continually demonstrated by its rapid disbursements following natural disasters, enabling governments to meet their most urgent needs, including support for vulnerable communities. CCRIF made payouts to three members in the 2021/22 insurance year – a payout of US$40 million to the government of Haiti after the August 2021 earthquake and payouts in Barbados after Tropical Cyclone Elsa and in Trinidad and Tobago after heavy rains in August 2021 The disbursement to Haiti represents the largest disbursement the CCRIF has made since its inception in 2007. Since 2007, the Facility has disbursed a total of 54 installments to 16 of its member governments, totaling approximately US$245 million – all paid within 14 days of the event. Based on the evaluation of the use of the disbursements, these funds have supported more than 3.5 million people in the Caribbean and Central America and have also been used to support the rehabilitation of essential infrastructure.

Countries can purchase policies with coverage of up to $150 million per risk, although countries’ limited fiscal space continues to limit their ability to do so and many are unable to purchase coverage. compatible with their country’s risk profiles, even under current conditions. discounts.

The CCRIF was established as the world’s first multi-country, multi-risk risk pool and was the first insurance vehicle to successfully develop parametric insurance policies for natural disasters. Parametric insurance, provided by CCRIF, is one of a series of disaster risk financing instruments available to governments to protect themselves financially in the aftermath of natural disasters. CCRIF’s parametric insurance has been specifically designed to cover high-intensity, low-frequency events and to provide rapid liquidity within 14 days of an event if a policy is triggered. CCRIF insurance fills the cash gap – that space between a country’s access to short-term supplies immediately after a natural disaster and before long-term reconstruction and redevelopment assistance begins. term. This really means that the CCRIF was not designed to cover all losses on the ground but to provide countries with a rapid injection of monetary resources to meet a country’s immediate needs and support the most vulnerable.

International discussions on sustainable post-COVID recovery call for investment in small island developing states in a range of disaster risk financing solutions and instruments such as parametric insurance and encourage governments to collaboratively deploy with public and private sector partners, other types of insurance mechanisms for vulnerable groups. CCRIF supports this approach and is currently leading the transition phase of the Caribbean Climate Risk Adaptation and Insurance (CRAIC) project and works alongside the Munich Climate Insurance Initiative, ILO Impact Insurance and Guardian General Insurance Ltd. to increase access to livelihoods. Protection Policy (LPP), a microinsurance product designed to protect the livelihoods of vulnerable low-income people by providing rapid cash payouts following extreme weather events. Additionally, CCRIF continues to roll out the COAST product for the fisheries sector, which has been halted by COVID. CCRIF continues to expand its products and continues to work with the Caribbean Electric Utility Services Corporation (CARILEC) on the deployment of its electric utility product.

About CCRIF SPC:

CCRIF SPC is a separate holding company, owned, operated and registered in the Caribbean. It limits the financial impact of catastrophic hurricanes, earthquakes and excessive rainfall on governments in the Caribbean and Central America by quickly providing short-term liquidity when a parametric insurance policy is triggered. It is the first regional fund in the world to use parametric insurance, offering member governments the unique opportunity to purchase coverage against earthquakes, hurricanes and excessive rainfall at the lowest possible price. The CCRIF was developed under the technical guidance of the World Bank and with a grant from the Government of Japan. It was funded through contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the United Kingdom and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as membership fees paid by participating governments. In 2014, a second MDTF was created by the World Bank to support the development of new CCRIF SPC products for current and potential members and to facilitate the entry of Central American and other Caribbean countries. The MDTF currently channels funds from various donors, including: Canada, through Global Affairs Canada; the United States, through the Treasury Department; the European Union, through the European Commission, and Germany, through the Federal Ministry for Economic Cooperation and Development and KfW. Additional funding was provided by the Caribbean Development Bank, with resources provided by Mexico; the Irish government; and the European Union through its Regional Resilience Building Facility managed by the Global Facility for Disaster Reduction and Recovery (GFDRR) and the World Bank.

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