It is expected Jamaica will be the first Caribbean country to sign up for the new insurance offering, followed by Trinidad and Haiti
BOGOTA (AlertNet) - Caribbean countries are eyeing up new disaster insurance coverage that would pay for some damages caused by extreme rainfall and flooding, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has said.
The CCRIF is a risk pooling fund in which 16 Caribbean counties pool their premuims in a disaster fund.
Since it was set up in 2007, CCRIF has provided its members with coverage of up to $100 million in a year for a hurricane or an earthquake, allowing some Caribbean countries to soften the economic impact of such natural catastrophes.
CCRIF's existing hurricane policies are based on wind and storm surge and do not cover damages and losses caused by extreme rainfall and or flooding resulting from hurricanes.
But following the launch of CCRIF's new excess rainfall product this month, Caribbean countries can now extend their disaster insurance coverage against heavy rains and flooding.
"The new excess rainfall product can boost coverage governments already have and fill the gap," said Simon Young, head of the Caribbean Risk Managers Ltd, the company that acts as a facility supervisor to the CCRIF.
"It's a pretty general hedge against heavy rainfall and weather. It's dictated by the amount of rainfall and it depends where the rain falls," Young told AlertNet by telephone from Kingston, Jamaica.
Hurricane and rain policies act independently, Young said, and the new product will offer coverage for excess rainfall, both within hurricanes and in non-hurricane systems.
The insurance product is based on a real time rainfall model using NASA-processed satellite data for the Caribbean that produces a rainfall accumulation map every six hours.
"Satellite data gives a picture of average rainfall across a certain area on which calculations are based on and potential loss of government assets, like infrastructure, are calculated," Young explained.
Rainfall payouts could, for example, help Caribbean governments pay the costs of fixing roads and bridges damaged by severe rainfall and or flooding, and clean up operations after storms and natural disasters, Young said.
JAMAICA FIRST ON BOARD
It is expected Jamaica will be the first Caribbean country to sign up for the new insurance offering, followed by Trinidad and Haiti.
"CCRIF has started preliminary discussion with Jamaica, Haiti and Trinidad," Young said. "Haiti is hugely exposed to heavy rain, as is Jamaica. I'm optimistic that within a month we should being closing discussions with the Jamaican government."
"We plan to make it available to all our members and we're more advanced in discussions with some countries than others," Young added.
While CCRIF's insurance scheme is only available to Caribbean Community (CARICOM) members, it is not being ruled out that it could be offered to other hurricane-prone countries outside CARICOM, such as those in Central America, Young said.
CCRIF, developed by the World Bank and other donors, is a parametric insurance scheme, which means that payments of claims are not based on actual losses or damage following natural disasters but are instead calculated according to pre-defined indexes based on the intensity, period and location of a disaster. Countries can buy coverage limited to specific events, areas, and for a specified amount of time.
Since 2007, CCRIF has made eight payouts totalling $32.2 million on three earthquake and five hurricane policies to seven countries. This includes $8.5 million to Barbados following tropical cyclone Tomas in 2010, and $7.7 million to Haiti in the aftermath of the massive earthquake in 2010.
According to the U.S. National Oceanic and Atmospheric Administration (NOAA), the 2012 Atlantic hurricane season is forecasted to be less active than in recent years, with four to eight hurricanes.
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