EU Contributes $17 Million to Caribbean Catastrophe Risk Insurance Facility

The European Union has joined the Caribbean Catastrophe Risk Insurance Facility’s (CCRIF) 16 member governments – Canada, the World Bank, the United Kingdom, Bermuda, Ireland, France and the Caribbean Development Bank – in donating to the facility’s reserve pool. The €12.5 million (app. $17 million) donation increased the tally to over $65 million given by CCRIF non-members.

Isaac Anthony, CARICOM appointed board member to the CCRIF and Director of Finance in the Ministry of Finance, St. Lucia welcomed the donation. He indicated that it not only demonstrates the far reaching support the facility has attracted, but also has important implications for all of the CCRIF’s 16 member governments.

“Last year was one of the most active hurricane seasons on record with a major hurricane formed in every month during the season, and losses on record of over US$45 billion,” Anthony noted. “The CCRIF was able to make a quick payout to Turks and Caicos after Hurricane Ike, thanks to the initial high capitalisation of the fund; and with experts already making predictions of a very active season in 2009, we know the European Union’s contribution will make it that much easier for us to fulfil our mandate of providing liquidity in the short term, after a catastrophic hurricane or earthquake, which causes damage great enough to prevent a member government from being able to fund its most crucial activities.”

The bulletin also indicated: “In June of 2007, the CCRIF raised $47.5 million in donor support from Canada, the World Bank, the United Kingdom, France and the Caribbean Development Bank; that same year CCRIF member governments paid a participation fee equal to their premium in the first year which, added to the donor support allowed the CCRIF to offer policies at a low cost. Early last year Ireland gave US$2.4 million to the CCRIF and last May Bermuda became the first government to be both a donor and member of the CCRIF when it gave US$500,000.”

The CCRIF is the first multi-country risk pool in the world, and is also the first insurance instrument to successfully develop a parametric policy backed by both traditional and capital markets. It is a regional insurance fund for Caribbean governments designed to limit the financial impact of catastrophic hurricanes and earthquakes to Caribbean governments by quickly providing financial liquidity when a policy is triggered. It is operated by the CGM Gallagher Group through its risk management company, Caribbean Risk Managers Ltd (CaribRM).

Sixteen governments are members of the fund: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Trinidad & Tobago and the Turks and Caicos Islands. In 2008, the CCRIF paid out approximately US$6.3M to Turks and Caicos in the aftermath of Hurricane Ike.

Source: CCRIF – http://ccrif.org