Payout to Tonga after Tropical Cyclone Ian

Like its neighbours in the Pacific Islands, Tonga is highly exposed to natural disasters: in fact, the whole region is one of the most vulnerable in the world. These recurring disasters not only cause widespread destruction, they also put a huge financial strain on the islands’ governments and hamper economic development.

Despite their idyllic setting, the Pacific Islands are highly vulnerable to natural catastrophes. We have helped to set up a pilot programme that gives six governments in the region quick access to emergency and reconstruction funds in the event of a disaster.

In view of this, Tonga decided to join the Pacific Catastrophe Risk Insurance Pilot, along with five other Pacific nations: the Marshall Islands, Samoa, the Solomon Islands, Vanuatu and – a little later – the Cook Islands. Arranged by the World Bank and launched in 2013, the pilot offers the governments of these six countries insurance protection against earthquakes, tsunamis and tropical cyclones, using a state-of-the-art “modelled loss” approach which quickly approximates the damage caused by a natural disaster. We cover the insurance plan jointly with other insurers and have also given technical feedback.

When the category 5 Tropical Cyclone Ian hit Tonga in early 2014, it caused widespread destruction, killing one person, displacing thousands and destroying vital infrastructure such as health centres and schools. In some parts of the Ha’apai island group, up to 75% of the buildings were damaged. The intensity of the cyclone meant that a payout was triggered, thus quickly providing funds to the government for emergency and reconstruction measures.