EU Helps Subsidize Premiums for CCRIF Parametric Insurance Policies
July 13, 2023
Again this year, the European Union provided support to CCRIF SPC to subsidize premiums for parametric insurance policies for CCRIF's Caribbean members.
The European Union provided CCRIF with $4.7 million to subsidize premiums for tropical cyclone and excess rainfall coverage for 12 eligible CCRIF Caribbean members for the policy year that began June 1. CCRIF's parametric insurance helps countries to financially protect their economies from devastating natural disasters such as hurricanes and excess rainfall.
Provided through a program administered by the World Bank, the EU funds allowed CCRIF to provide discounts of approximately 14 percent on the gross premiums of members' tropical cyclone and excess rainfall policies. The EU funds also enable technical assistance oriented towards ensuring the sustainability of climate and disaster risk insurance in future years.
The most recent EU support is a continuation of the European Union's efforts to help Caribbean countries maintain climate and disaster risk protection during difficult economic times. Over the period from 2007 to 2023, the European Union has been one of CCRIF's main development partners, contributing more than €45 million to CCRIF.
The European Union also contributed to CCRIF's initial capitalization and provided technical assistance for the development of its parametric insurance products.
"The success of CCRIF is undoubtedly due in part to the support—both technical and financial—that we receive from our development partners," CCRIF CEO Isaac Anthony said in a statement. "This support from the European Union continues to be key to allowing us to meet the needs of our current and potential members. It allows us to make available more affordable insurance coverage to our members, to improve the long-term sustainability of CCRIF, and to develop new products for additional perils and sectors."
CCRIF currently offers five parametric insurance products: earthquake, based on modeled losses due to ground shaking; tropical cyclone, based on modeled losses due to wind and storm surge; excess rainfall, based on modeled losses due to the amount of rainfall; the Caribbean Ocean and Aquaculture Sustainability FaciliTy (COAST) product for the fisheries sector, based on rain, waves, wind, and storm surge; and a product for electric utilities, based on losses due to wind for their transmission and distribution lines.
Previously known as the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company, CCRIF SPC is a segregated portfolio company that is owned, operated, and registered in the Caribbean. It limits the financial impact of such disasters as catastrophic hurricanes, earthquakes, and excess rainfall events on Caribbean and Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered.
CCRIF's parametric insurance was specifically designed to cover high-intensity, low-frequency events and provide quick liquidity within 14 days of an event if a policy is triggered.
CCRIF SPC was developed under the technical leadership of the World Bank and with a grant from the government of Japan. It was capitalized through contributions to a multidonor trust fund by the government of Canada, the European Union, the World Bank, 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.
Since its inception in 2007, CCRIF has made 59 payouts totaling $261.4 million to 16 of its member governments.
July 13, 2023