(Jamaica Gleaner) The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has capital well in excess of its retained risk of US$25 million to cover payouts on more extreme disasters, including those classified as 1 in 10,000-year events.
The World Bank in a newly released results report on CCRIF said the facility previously had reserves allowing it to respond to events that may occur only once in every 1,401 years without needing to draw on more than US$25 million of its assets.
CCRIF is now in its sixth year of operation. It insures 16 Caribbean countries against hurricanes and earthquakes and, more recently, extreme rainfall.
The World Bank cautioned, however, that for CCRIF to survive a payout on a 10,000-year event, should one occur, it would immediately require recapitalisation.
CCRIF’s unaudited financial statements, for the year ending May 31, 2012, showed retained earnings of US$94.6 million and total assets of US$118.4 million, up from retained earnings of US$89.8 million and total assets in excess of US$114 million for the year 2011.
For the policy year ending May 31, 2012 all members renewed their policies. The facility wrote 16 hurricane and 13 earthquake policies with a total coverage limit of US$624.4 million.
During that period, it obtained reinsurance to cover US$125 million of the risk, with the balance being taken up initially by the World Bank’s Treasury and then later transfered to reinsurers on the capital market.
For the 2012-13 year, CCRIF has issued coverage totalling US$626.2 million to all 16 members.
CCRIF was established in June 2007 as the first-ever regional insurance fund to limit the financial impact of catastrophic hurricanes and earthquakes on Caribbean budgets.
Seeking new
members
It was developed through funding from the Japanese government, and was capitalised through contributions to a multi-donor Trust Fund by the World Bank, the Government of Canada, the European Union, the governments of the United Kingdom and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments.
Over the years, it has maintained its 16-country membership of which Jamaica is one, but is also looking to recruit additional country participants.
Additionally, it is also working to expand its product line and has added insurance against excess rainfall to its portfolio of offerings to Caribbean governments during the current policy year.
