The European Union continues to provide support to Caribbean Catastrophe Risk Insurance Facility SPC as a means of subsidizing premiums on the parametric insurance policies of its Caribbean members, CCRIF says.
This policy year, which started on June 1, 2023, the EU provided CCRIF with $4.7 mn in support of the 12 ODA-eligible Caribbean members of CCRIF1 to subsidize premiums for tropical cyclone and excess rainfall.
CCRIF’s parametric insurance helps countries to financially protect their economies from devastating natural disasters such as hurricanes and excess rainfall.
Provided through a programme administered by the World Bank, the EU funds enabled CCRIF to provide discounts of approximately 14% on the gross premium of members’ tropical cyclone and excess rainfall policies.
The EU funds also enable technical assistance oriented towards ensuring the sustainability of climate and disaster risk insurance in the years to come.
This current support is a continuation of the EU’s efforts to assist Caribbean countries in maintaining climate and disaster risk protection during hard economic times. Over the period 2007-2023, the European Union has been one of CCRIF’s main development partners. In total, since the establishment of CCRIF in 2007, the EU’s contribution to CCRIF is equivalent to more than €45 million.
The EU contributed to the initial capitalization of CCRIF, the entry of new countries, and the development of new parametric insurance products through technical assistance as well as support to respond to the significant disruption of Caribbean economies as a consequence of the COVID-19 pandemic.
During 2020-2022, the EU support was managed in coordination with the EU Caribbean Regional Resilience Building Facility administered by the World Bank’s Global Facility for Disaster Reduction and Recovery (GFDRR).
This support provided each Caribbean CCRIF member country with premium discounts or increases in policy coverage. During the past three years (2020/21 to 2022/23) several CCRIF member countries used this funding to increase tropical cyclone and/or excess rainfall coverage.
CCRIF currently offers five parametric insurance products:
- earthquake, based on modelled losses due to ground shaking;
- tropical cyclone, based on modelled losses due to wind and storm surge;
- excess rainfall, based on modelled losses due to the amount of rainfall;
- the Caribbean Ocean and Aquaculture Sustainability FaciliTy (COAST) product for the fisheries sector, based on rain, waves, wind and storm surge;
- a product for electric utilities, based on losses due to wind for their transmission and distribution lines.
CCRIF is continuing the rollout of the COAST product, and also the electric utilities product, in collaboration with the Caribbean Electric Utility Services Corporation (CARILEC).
Additionally, the Facility will launch a product this year for water utility companies in partnership with the Inter-American Development Bank and a product for rainfall runoff, initially for Guyana and Suriname, which will be offered to Central American and larger Caribbean countries in subsequent years.
Since the inception of CCRIF in 2007, the Facility has made 59 payouts totalling $261.4 mn to 16 of its member governments – all within 14 days of the triggering of an event.
CCRIF payouts were not designed to cover all losses on the ground but to provide an injection of quick liquidity immediately following a natural catastrophe to allow governments to quickly begin recovery, including supporting the most vulnerable in their populations.
A rough assessment of the beneficiaries of CCRIF’s payouts shows that over 3.5 million persons in the Caribbean and Central America have benefitted directly or indirectly from these payouts.
Governments have also used payouts to support key sectors such as agriculture, tourism, and education.