Dr. Omar Davies, Minister of Finance, said Jamaica's premium payment to the Caribbean Catastrophe Risk Insurance Facility was $241 million. - File The new Cayman-registered Caribbean Catastrophe Risk Insurance Facility (CCRIF) became operational at the top of the hurricane season, offering the 16 participating states access to funds to finance recovery if a disaster hits.
"The CCRIF's capacity to service claims is based on its own reserves combined with the financial capacity of the international financial markets," said the multilateral.
"This will allow CCRIF to respond to events that may occur only once every 1,000 years or more, achieving a higher level of resiliency than international standards."
The World Bank says the fund is able to cover US$110 million of claims, backed by reinsurance arranged by brokerage firm Benfield Limited from an international pool.
Munich Re is the lead reinsurer with Paris Re and Hiscox (Lloyd's Syndicate 33) also participating in the four layered structure.
CCRIF retains the first layer of US$10 million; reinsurers underwrite the second US$15 million and third US$25 million layers; while the top layer of US$70 million is financed by a reinsurance and US$20 million catastrophe swap combination.
"The US$20 million swap between IBRD and CCRIF is the first transaction to enable emerging countries to use a derivative transaction to access the capital market to insure against natural disasters," said the bank.
Capital markets
"It is also the first time a diversified pool of emerging market countries" catastrophe risk is placed in the capital markets."
Countries covered under the CCRIF are Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Trinidad & Tobago, Turks and Caicos Islands.
"This new facility is being launched just in time for the beginning of the 2007 hurricane season, which according to the experts, may be particularly severe," said Caroline Anstey, World Bank country director for the Caribbean.
CCRIF is being capitalised by donor pledges. The funds from Canada US$17.5 million, the United Kingdom US$7.5 million, and the World Bank through the International Bank for Reconstruction and Development US$10 million, have already been received, while contributions from Bermuda, France US$6.5 million, and the Caribbean Development Bank's US$5 million are pending.
Other financing of the facility is through premiums payable by participating countries, with Jamaica's amounting to J$241 million this year according to figures tabled by Finance Minister Dr. Omar Davies.
The facility is operated by Caribbean Risk Managers Limited with support from Sagicor Insurance Managers Limited.
