Bahamas qualifies for US$11-m hurricane insurance payout

Bahamas qualifies for US$11-m hurricane insurance payout

Monday, September 09, 2019

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MULTI-country risk insurance company Caribbean Catastrophe Risk Insurance Facility (CCRIF) SPC announced on Friday that it is paying out just shy of US$11 million to The Bahamas following the passage of Hurricane Dorian which caused widespread devastation in the northern part of the 700-island archipelago last week.

CCRIF said 50 per cent of the funds — which will total US$10,936,103 — were disbursed on Friday, with the remainder to be paid within the usual 14-day period for all policies.

CCRIF sells parametric insurance, not indemnity or traditional insurance, to Caribbean and Central American governments for catastrophic hurricanes, earthquakes and excess rainfall events. The parametric model means that CCRIF makes payments based on the intensity of an event (for example, hurricane wind speed, earthquake intensity, volume of rainfall) and the amount of loss calculated in a pre-agreed model caused by said events.

It means that payouts can be made very quickly after a hazard event, since no on-the-ground assessment of individual losses is required, and no claims have to be submitted, as with traditional insurance.

The Bahamas has three tropical cyclone policies with CCRIF, each one covering a section or zone of the archipelago – North West, South East and Central. Dorian caused the tropical cyclone policy for the North West Zone to be triggered.

The hurricane was category five when it made landfall on September 1 and battered the Abaco Islands and Grand Bahama for two days. It left 70,000 people homeless and 43 dead, as of Saturday.

In a statement to the press, CCRIF CEO Isaac Anthony said he had contacted the Government of The Bahamas to inform them of the payout, express the facility's commiseration for the many lives lost, and to pledge support to the Government as it seeks to recover and rebuild infrastructure and lives. Anthony also expressed relief that Dorian spared most of the other islands.

He said that CCRIF could provide additional support to the Government of The Bahamas from the facility's corporate social responsibility or technical assistance (TA) programme.

The Bahamas was the recipient in 2012 of a TA grant of US$85,000 following the passage of Hurricane Sandy for the construction of a new sea wall at Sandyport Beach. Similar sized grants have been provided over the years to Jamaica (US$100,000 for the rehabilitation of the Muirton Boys' Home following Hurricane Sandy in 2012) and Dominica (US$100,000 for the construction of new fencing at the Douglas-Charles Airport, which was damaged by Tropical Storm Erika in 2016) among others, Anthony added.

Since CCRIF's inception in 2007, the facility has made 38 payouts totalling a little over US$139 million to 13 of its 21 member governments, directly or indirectly benefiting roughly 2.5 million people in the Caribbean and Central America after a disaster, said Anthony.

CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalised through contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank, and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments.

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