An insurance scheme that ensured Dominica, a small Caribbean island, received a quick $20m payout after it was ravaged by Hurricane Maria last month, could serve as a model for other groupings of small states vulnerable to natural disasters, according to industry experts.
The money came from the CCRIF-SPC, an insurance policy with 17 member Caribbean and Central American countries that pays out in the wake of hurricanes, earthquakes and excess rainfalls. It has paid out more than $120m since its start in 2007, including $50.7m so far during the 2017 hurricane season.
CCRIF can pay on premiums quickly, because disbursements are based on the conditions of the disaster — amount of rain or wind speed — instead of a post-disaster assessment. The model receives premium payments from members and is supported by a trust fund from donors, including the World Bank.
Isaac Anthony, CCRIF-SPC’s CEO, said the insurance system was unique and could serve as a model. “CCRIF is the world’s first multi-country, multi-peril risk pool and was the first insurance instrument to successfully develop parametric policies backed by both traditional and capital markets,” he said.
Its influence has already started to spread. It is in talks locally to bring in three more countries and was the model for the Africa Risk Capacity. It has been working with small island states in the Pacific about how the CCRIF model could be adapted for those countries.
Anthony said the CCRIF was working on “new products that would enable countries to reduce the impacts of other types of hazards and also impacts on key economic sectors. We are currently in the process of developing models for drought, agriculture and fisheries.”
Member states are pleased with how the CCRIF has worked, but they would like to get more outside support. “It is a very useful mechanism that is working, you can draw money. One of the most important things post-disaster is to get money quickly,” Saint Vincent and the Grenadines economic planning minister Camillo Gonsalves told GlobalMarkets. “While it disburses funds quickly, it needs more money. Our countries don’t have the fiscal space to make greater contributions to the CCRIF.”