The Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) says nine regional countries have increased their level of coverage as the Caribbean completed its insurance portfolio for the 2019-20 hurricane season.
It said one unnamed Caribbean state purchased cover for an additional peril (tropical cyclone) that it did not have last year.
CCRIF, which is the world’s first multi-country risk pool offering parametric insurance products, said that the regional countries are covered for another year against tropical cyclones as well as excess rainfall events, which occur throughout the year and earthquakes, which may occur at any time.
“Additionally, the Facility has provided its members with two policy features – the Aggregate Deductible Cover (ADC) and Reinstatement of Sum Insured Cover (RSIC) – at no cost for 2019/20,” it said, adding that these two features for tropical cyclone and earthquake policies were first offered in 2017.
The ADC can provide a minimum payment for events that are objectively not sufficient to trigger a CCRIF policy because the modelled loss is below the attachment point or deductible, while the RSIC provides access to coverage during a policy year even after the maximum coverage limit is reached.
“This prevents the situation where the insurance cover is exhausted early in the policy year thus leaving a country exposed until the policy renewal date of June 1 the following year.”
CCRIF’s parametric insurance is one of the main ex-ante financing options utilized by governments and the Cayman-based company said that its tropical cyclone and earthquake policies for this hurricane season are based on a new risk model called SPHERA (System for Probabilistic Hazard Evaluation and Risk Assessment), which replaces the MPRES model, which had been the basis for these policies since 2011.
“SPHERA is a new state-of-the-art model, based on the latest scientific findings and the most updated hazard datasets. The new model features new, up-to-date ground motion, wind and storm surge models; a larger and more detailed stochastic catalogue of events; a more detailed exposure database, including infrastructure and facilities; and new, updated vulnerability functions.”
In 2017, the CCRIF said that since its inception in 2007, it had made payouts of more than US$100 million to 12 of its 17 member countries.
This year, the US-based National Oceanic and Atmospheric Administration (NOAA) has predicted a “near normal” hurricane season this year, saying there is a likelihood of nine to 15 named storms, of which four to eight could become hurricanes, including two to four major hurricanes occurring in the Atlantic this year.
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