Payouts to Caribbean governments
Caribbean countries are heavily exposed to natural catastrophes such as tropical cyclones, earthquakes and excessive rainfall. Funding initial relief measures and maintaining vital government functions after a disaster creates a significant funding challenge for these small developing economies.
When hurricanes Irma and Maria hit the Caribbean in 2017, they caused significant damage and triggered payouts of USD 30.8 million and USD 23.6 million, respectively, from a regional insurance facility called CCRIF SPC. Originally set up in 2007 by 16 regional governments as the Caribbean Catastrophe Risk Insurance Facility (CCRIF) under the technical guidance of the World Bank, it was the world’s first multi-country risk pool. Its objective was to provide governments quick access to emergency funding by using parametric policies that are automatically triggered according to the physical characteristics of an event. Swiss Re has been acting as the facility’s lead reinsurer right from the start.
The original CCRIF structure has seen some important changes over the years. In 2014, coverage was extended from tropical cyclones and earthquakes to include excessive rainfall. The facility was restructured into a segregated portfolio company (SPC) to allow for total risk segregation, and renamed accordingly. In the ten years from its inception until 2017, it has made 36 payouts to 13 member governments, totalling USD 130.5 million. All payouts were made within 14 days of the end of the respective event.