Member governments of the CCRIF, formerly known as the Caribbean Catastrophe Risk Insurance Facility, have renewed their insurance coverage for tropical cyclones, excess rainfall and earthquakes ahead the 1 June start of this year’s hurricane season.
Caribbean and Central American governments ceded more than US$1 billion in risk to the CCRIF and increased their overall coverage by 8%.
The CCRIF was designed to provide quick liquidity, typically within two weeks, to governments to deal with the aftermath of natural disasters.
Since its inception in 2007, the facility has made 41 payouts totalling US$152 million to 13 of its 22 member governments under the three natural-disaster policies.
For example, following Hurricanes Irma and Maria in 2017, CCRIF paid out a total of US$55 million to nine affected Caribbean countries.
The facility, which is structured as a Cayman-based segregated portfolio company, made its largest payout of US$20.4 million to the government of Haiti following Hurricane Matthew in 2016.
The CCRIF noted in a press release that scientific consensus predicts an above-average Atlantic hurricane season for this year.
The US National Oceanic and Atmospheric Administration is forecasting a likely range of 13 to 19 named storms, of which six to 10 could become hurricanes with winds of 74 mph or higher. This includes three to six major hurricanes with winds in excess of 111 mph.
This year the European Union has provided a grant of EUR10 million (US$11 million) to the facility for premium support under its global COVID-19-response programme.
The EU funds are available for each member country and will provide at least a 26% discount on total gross premium or an increase in policy coverage under their CCRIF parametric insurance policies.
The EU has been one of CCRIF’s development partners since the inception of the risk-insurance facility, providing some of the initial capital.