The Government of Jamaica (GOJ) has drawn down $500 million in catastrophic payout from its Caribbean Catastrophe Risk Insurance Facility (CCRIF).

The payment, which was made last month was in respect of Jamaica’s claim in its 2020/21 Excess Rainfall policy, held with CCRIF Segregated Portfolio Company, which was created to limit the financial impact of natural hazard events to Caribbean and Central American governments by quickly providing short-term liquidity when a policy is triggered.

CCRIF offers parametric insurance policies for tropical cyclones, earthquakes, excess rainfall and the fisheries sector.

The insurance facility currently has 23 member states. Finance Minister Dr Nigel Clarke, who made the announcement, said the payout was related to the intense and persistent rainfall associated with Tropical Cyclone Zeta in October last year and Eta, the following month in November, which caused loss of lives and significant damage, particularly to the country’s road network.

INSURANCE PROCEEDS TO FUND REPAIR TO DAMAGED ROAD NETWORK

He disclosed that the CCRIF payout will be used primarily to cover the cost of repairs to the most damaged sections of our road network.

In a statement to the media, the finance minister indicated that this disaster risk insurance policy was taken out because of Jamaica’s experience of being susceptible to natural disaster events including flooding.

Pointing to the significant damage natural disasters can cause to the country’s infrastructure, Dr Clarke stated that this is the reason why the Government of Jamaica sought to implement a multilayer disaster management strategy with a menu of financial instruments to manage the financing of disaster risk.

He said that as Jamaica continues to simultaneously respond to the novel coronavirus pandemic, this payout and certainly the country’s participation in CCRIF and other similar facilities will reduce the need for the shifting of fiscal resources from other priority areas to respond to natural disasters.

Jamaica’s subscription to CCRIF forms part of the Government’s larger, multiyear framework developed to manage the financing of disaster risk.

Minister Clarke pointed to other elements of the GOJ’s Disaster Risk Financing Framework including a Contingency Credit Facility with the Inter-American Development Bank (IDB) and the capitalising of the country’s own Contingencies Fund.

He said the GOJ is continuing to work on Catastrophe Bond through the World Bank, the placement of which has been delayed due to the novel coronavirus pandemic.

CCRIF FORMATION

In 2007, the CCRIF was formed 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.

In 2014, the facility was restructured into a segregated portfolio company (SPC) to facilitate offering new products and expansion into new geographic areas and is now named CCRIF SPC. It is owned, operated and registered in the Caribbean.