Leader of Government Business Kurt Tibbetts said he expected to meet this week with administrators of a storm relief fund about whether Cayman would receive any cash from that fund in the wake of Hurricane Paloma.
In 2007, Cayman began paying premiums of US $2 million to the Caribbean Catastrophic Risk Insurance Facility, a World Bank-administered emergency cash fund which acts as a mechanism for Caribbean countries to receive aid quickly in the aftermath of natural catastrophes such as hurricanes or earthquakes.
Cayman also paid a US $2 million initial participation fee to the fund in 2007. Some 16 Caribbean countries participate in the Catastrophic Risk Insurance Facility.
On Thursday, Mr. Tibbetts said he had received a five page report from fund administrators which indicated ‘the initial stance taken by the fund is not good news for us with regards to claim.’
Government leaders declined to release the report last week.
Fund supervisor Simon Young was expected to meet this week with government officials to discuss the facility’s initial decision not to award any claims to Cayman.
‘What we have is an initial assessment and an initial response from them, it is not final and official,’ Mr. Tibbetts said.
The government has ‘ballpark’ estimated repair costs from Paloma, which struck Cayman Brac and Little Cayman as a Category 4 hurricane the morning of 8 November, were going to be between $15 million to $20 million.
The Caribbean Catastrophic Risk Insurance Facility was first developed as a way for countries in the region to receive a first batch of relief funding quickly, without having to wait for insurance adjusters to provide damage estimates; a process which can taken months following major storms.
‘A paramount advantage would be the speed of recovery of funds,’ Financial Secretary Kenneth Jefferson told the Legislative Assembly in March 2007. ‘What has to be proven, in the case of a hurricane…the strength of the wind would have to be determined.’
‘This insurance will place us to the point where, should anything happen…there will be a pay out and we don’t have to go through normal insurance procedures,’ Mr. Tibbetts said, also in the March 2007 LA debate.
However, preliminary estimates from the risk insurance fund did indeed seem to take damages from the storm into consideration. Although damage on the Sister Islands from Paloma, Cayman Brac especially, was severe, economic activity generated on those islands represents a relatively small percentage of the entire country’s activity.
Mr. Tibbetts said these issues would by discussed with Mr. Young this week.
‘We’re going to have to seriously consider, depending on what the end result is of the talks with him, whether its better paying this premium we simply put it towards a disaster fund,’ Mr. Tibbetts said.
When the relief fund was first established last year, the US $2 million premium was expected to provide Cayman with up to $53.3 million in insurance coverage in the event of a hurricane and up to $4.7 million if an earthquake struck the islands.