US$31 million payout for Irma
Destruction in Anguilla after Hurricane Irma.
With two months still to go in the 2017 Atlantic Hurricane Season, the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) has already made payouts totaling US$31.2 million to six countries under their tropical cyclone (TC) and excess rainfall (XSR) policies and under a new feature for tropical cyclone policies known as the Aggregate Deductible Cover (ADC), following the passage of Hurricane Irma.
Antigua & Barbuda (TC) – US$6,794,875
Anguilla (TC and XSR) – US$6,687,923
St. Kitts & Nevis (TC) – US$2,294,603
Turks & Caicos Islands (TC and XSR) – US$14,864,633
Haiti (ADC) – US$162,000
The Bahamas (ADC and XSR) – US$397,598
(Total - US$31,201,632)
The CCRIF said Tuesday this brings the sum of payouts since its inception to just over US$100 million. These payments have been made to 12 of its 17 member countries – all within 14 days of the event.
According to CCRIF CEO, Isaac Anthony, “The injection of short-term liquidity that CCRIF provides when a policy is triggered is not intended to cover all the losses on the ground following a disaster, but is designed to allow governments to reduce their budget volatility and to provide much-needed capital for emergency relief such as clearing of debris and other cleanup activities, restoring critical infrastructure, and most importantly providing humanitarian assistance to the affected population, thereby reducing post-disaster resource deficits”.
For many countries, when a disaster strikes, governments, and especially those of developing countries such as those in the Caribbean and Central America, must divert from their budgets to finance post-disaster expenses, and often must also rely on new loans (even if those are at concessionary rates) and donations from the regional and international community which oftentimes come weeks or months after the event, the CCRIF explained.
However, the facility was designed to help countries add to their revenues in the short term by providing an infusion of cash to help them finance the initial phase of their disaster response and avoid interruption of their basic business of government.
Each of its member country pays an annual premium directly related to the amount of risk it transfers to CCRIF and can purchase coverage up to a limit of approximately US$100 million for each insured hazard (tropical cyclones, earthquakes and excess rainfall events).
According to Anthony, “By pooling the catastrophe risks of our members into a single diversified portfolio, we are able to save our members approximately 50 per cent in individual premium payments compared to if they were to purchase identical coverage individually.”