CCRIF makes first parametric insurance payouts of 2021 Atlantic hurricane seasonThursday, July 29, 2021
GRAND CAYMAN, Cayman Islands (CMC)— The CCRIF, formerly known as the Caribbean Catastrophic Risk Insurance Facility, has confirmed that it has paid out more than US$3 million to four countries – its first payouts for the 2021 Atlantic hurricane season – following the passage of Hurricane Elsa which caused major damage in some parts of the Caribbean earlier this month.
It said on Thursday that it had made payouts to the Government of Barbados under the country's tropical cyclone and excess rainfall parametric insurance policies, totalling US$2.5 million.
It also made payments totalling US$528,512 to the governments of Haiti, St Lucia, and St Vincent and the Grenadines under the Aggregate Deductible Cover (ADC) feature of CCRIF's tropical cyclone policies.
Hurricane Elsa, the fifth storm in the 2021 Atlantic hurricane season, battered the recipient countries with strong winds and heavy rains.
Three deaths – one in St Lucia and two others in the Dominican Republic – were blamed on the storm.
Since the inception of CCRIF in 2007, the Facility has made 52 payouts totalling US$202.5 million to 16 of its 23 members, with the Government of Haiti receiving four payouts totalling US$38.3 million and the Government of Barbados receiving seven payouts totalling US$21.8 million. These two countries have received about 30 per cent of CCRIF's total payouts.
CCRIF's parametric insurance products make payments based on the intensity of a natural hazard event – like hurricane wind speed, earthquake intensity, and volume of rainfall – and the exposure or assets affected by the event, and the amount of loss calculated in a pre-agreed model caused by the event.
A CCRIF policy is triggered based on the government loss estimated in the loss model, which in turn is based on the characteristics of the hazard – wind and storm surge for tropical cyclone policies and amount of rainfall for excess rainfall policies – and the vulnerability, distribution and exposure of government assets affected by the event.
Although CCRIF acts as a security blanket for countries, it was not designed to cover all losses on the ground as a result of a catastrophe. It is instead meant to ensure that there is some measure of quick liquidity available to governments as additional resources are mobilized to assist with the longer-term recovery and redevelopment processes.
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