Last Thursday, CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility) paid USD $261,073 (CAD $337,699) to the government of Belize under its excess rainfall insurance policy. The payout was made two weeks after Hurricane Earl ravaged Belize on August 4 and 5.
Hurricane Earl struck Belize as a Category 1 and caused extensive damage to infrastructure, homes, and businesses. Earl also triggered widespread flooding, interruptions of water and electrical services, as well as losses to the tourism and agricultural industries.
The country purchased excess rainfall coverage for the first time in the 2016/2017-policy year, which began on June 1. The modeled “Rainfall Index Loss” determined from the level of Hurricane Earl’s rainfall was greater than the deductible on Belize’s excess rainfall policy. As a result, the policy was triggered.
As part of its disaster risk management program, Belize also has a CCRIF tropical cyclone or hurricane policy (TC). This policy is based on modeled losses due to wind and storm surges. As those losses were below the policy attachment point as selected by the government of Belize, the policy wasn’t triggered.
CCRIF’s parametric insurance policies are insurance contracts that make payments based on the intensity of an event and the amount of loss calculated in a pre-agreed model triggered by the event. Consequentially, payouts can be made quickly after a catastrophic event.
CCRIF was formed in 2007 as the first multi-country risk pool in the world. Designed as a regional catastrophe fund for Caribbean and Central American governments, CCRIF limits the financial impact of hurricanes and earthquakes by quickly providing financial liquidity when a policy is triggered.
CCRIF was capitalized through contributions to a Multi-Donor Trust Fund (MDTF) by the governments of Canada, UK, France, Ireland, and Bermuda; the EU and World Bank; as well as the Caribbean Development Bank. Additional capitalization was sourced through membership fees paid by participating governments.
