JAMAICA is this month pumping $241 million into the Caribbean Catastrophe Risk Insurance Facility (CCRIF), as this year’s premium payments. Finance Minister Omar Davies, in defending the government’s decision to participate in the facility, said it would be most important to the region in terms of the immediate need for resources.

“While we recognise that the donor community and the multilateral institutions will assist the reconstruction efforts, there is always immediate need for resources to cover emergencies. For example, clean up operations, to effect immediate repairs and to assist the most vulnerable individuals and groups,” Dr Davies told the Donor’s Pledging Conference in Washington DC on February 26.

In the meantime, he told the House of Representative’s Standing Finance Committee (SFC) on March 6 that the Caribbean-owned regional institution is the first regional disaster insurance facility in the world.

Asked by the Opposition Leader Bruce Golding to explain the contribution of $241 million included in the 2006/2007 supplementary estimates, Davies said that the sum represented this year’s premiums.

“The donor community last Monday committed US$47 million into capitalising the fund which will deal with anything, in the first instance, and also assist in terms of the reduction of the premiums which we face,” the minister said.

Donors have pledged US$47 million to the reserve fund, which will allow for immediate access in the case of disasters this year.

Pledges have been made by Canada, US$17.5 million; France, US$6.5 million; the United Kingdom, US$7.5 million; the Caribbean Development Bank (CDB), US$5 million; and the World Bank, US$10 million.

Golding asked the minister a number of clarifying questions, afterwards.

Golding: What have we committed ourselves to?

Davies: To be a start-up member in terms of purchasing insurance for hurricane and earthquake.

Golding: Is this confined just to the Caribbean?

Davies: Well yes, (but) Pacific countries are enquiring whether they can set up their own or, better yet, whether they can join us which would spread the risk.

Dr Davies said Jamaica requested that floods be added to the two disasters currently covered – hurricanes and earthquakes – but admitted that it was a problem.

He also suggested to donors that the risk

be extended to cover crop insurance as “the volatility of agricultural output has important implications for fiscal and economic management and social interventions”.

According to the supplementary estimates, the contribution of $241 million was an additional requirement to fund the insurance facility, so as to provide client governments with immediate liquidity in the instance of an occurrence of an adverse natural event such as hurricane or earthquake of

predefined magnitude.

The CCRIF, the world’s first ever multi-country catastrophe insurance pool, will provide participating governments with immediate access liquidity in the event of a hurricane or earthquake.

It will also provide governments with indexed-based insurance against government losses caused by natural disasters, and allow regional governments to purchase coverage, akin to a business continuity insurance, that will provide them with an early cash payment after the disaster.

The use of parametric triggers (payment triggered by the intensity of the event, rather than the extent of the damage) will allow for the very rapid payment of claims.

By pooling their risk, the 18 participating countries in the region will save approximately 40 per cent in individual premium payments.

Participating countries are Antigua, the Bahamas, Barbados, Grenada, Haiti, Jamaica, Bermuda, Montserrat, St Lucia, Belize, Trinidad and Tobago, St Kitts, St Vincent, Dominica, the British Virgin Islands, Anguilla, Turks and

Caicos Island and the Cayman Islands.