The world’s first regional insurance fund may just not be enough to cover damage to Caribbean countries caused by natural disasters.
CARICOM Chairman Freundel Stuart has admitted that while the implementation of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) was a “reflection of our regional genius,” it may not be able to adequately cover the expenses of those islands affected by catastrophic natural disasters.
He made the comments during a press conference at the Grace Adams Suite of the Grantley Adams International Airport last night shortly after returning from Dominica where he viewed the devastation caused when Tropical Storm Erika hit the island on August 27.
While revealing that Barbados was able to “draw down on it” when Tropical Storm Tomas hit in 2010, Stuart said the facility’s financial resources were somewhat limited.
“It is a reflection of our regional genius that we were able to put this together to respond to evident vulnerabilities in this region. There may be scope and perhaps we have to look for scope to broaden its applicability and to try to enhance the volume of resources it has at its disposal, because quite frankly climate change is on us,” Stuart told the media during the press conference.
“The risk facility has shown its capacity to respond quickly when these events happen, but given the scale of the events, it is very quickly emerging that the risk facility’s resources may be inadequate to the size of the challenge and therefore it is going to require a revisiting of all of that, with a view to see how best we can create mechanisms that more nearly reflect the size of the challenge we have to face.
“We have to look at how best we can broaden the base of resources available to us, so that when we have these events which highlight and accentuate our vulnerability, that we can respond more effectively,” he added.
The Caribbean Catastrophe Risk Insurance Facility was formed in 2007 as the first multi-country risk pool in the world, and was the first insurance instrument to successfully develop parametric policies backed by both traditional and capital markets.
It was designed as a regional catastrophe fund for Caribbean governments to limit the financial impact of devastating hurricanes and earthquakes by quickly providing financial liquidity when a policy is triggered.
In 2014 the facility, which is registered in the Cayman Islands, was restructured into a segregated portfolio company (SPC) to facilitate expansion into new products and geographic areas.
The Prime Minister said some progress had been made as it related to accessing Climate Funds.
However, he said he hoped that in times of need, access to those funds would not require lengthy deliberations before that money is distributed.
“We hope that accessing those funds would not require us to thread our way through some torturous labyrinth in order to get at them. If we have events like what Dominica just experienced, or what St Vincent and the Grenadines experienced in 2013, or Barbados in 2010, that we should be able to access these funds quickly with as little bureaucracy as possible.”
CCRIF announced late today that it has made a payment of EC$6.5 million (approximately US$2.4 million) to Dominica under its Excess Rainfall Programme. It said the payment was the maximum payable under the policy.
The Facility said it would provide additional financial assistance under its Technical Assistance Programme, for specific rebuilding projects.
Dominica is one of 12 member countries that purchased excess rainfall coverage this year to complement the country’s hurricane insurance which is based on damage caused by wind and storm surge.
“The CCRIF Board and Team wish to express our condolences to the people of Dominica for the loss of life and disruption of livelihoods and we offer our support as you implement your recovery and rehabilitation activities. We are hopeful that the funds received from CCRIF will provide immediate liquidity to address your most urgent needs,” Chief Executive Officer Isaac Anthony was quoted in the CCRIF release as saying.
This is the second payout that Dominica will have received from CCRIF. The first was in 2007 for damage caused by a magnitude 7.4 earthquake that occurred in November of that year.