Gareth Manning, Sunday Gleaner Reporter
DISASTER MANAGEMENT and meteorology officials are concerned that the island is not likely to receive insurance indemnity if it were hit by a hurricane that caused more damage from heavy rainfall than wind.
Last year, the former People's National Party (PNP) administration paid a US$4 million (J$280 million) premium for US$94.4 million (J$6.5 billion) of insurance coverage for major hurricane and earthquake damage under the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The insurance coverage was split between US$50 million (J$3.4 billion) for hurricane damage and US$44.4 million (J$3 billion) for damage from earthquakes.
Could not claim indemnity
However, following Hurricane Dean, the country discovered it could not claim indemnity because the insurers said the hurricane was not severe enough, despite causing approximately $22 billion in total damage.
The CCRIF insurance is based on a parametric model, which means indemnity is provided on the basis of the intensity of the storm rather than on the specific losses the country faces. Intensity is calculated based on wind speed and does not factor in flood damage.
The CCRIF operates like a trust fund and, therefore, money paid to it stay in the fund for future events. The facility covers 16 CARICOM countries.
Unhappy with terms
A highly placed Jamaican technocrat, however, says while many local stakeholders welcomed the idea of an insurance fund, they are unhappy with the terms of the agreement which they believed had loopholes.
"Nobody from the Met Office was consulted, nobody from the disaster offices were consulted and a number of leading engineers in the region were not consulted," the source tells The Sunday Gleaner.
Many are concerned, the source says, that the policy is based on wind intensities that are not likely to affect the island often. Using Hurricane Ivan as an example, the source points out that not all hurricanes are wind-driven, which means the island is not likely to receive insurance indemnity if it were hit by a hurricane that causes more damage from heavy rainfall than wind.
"If you base the insurance only on wind, you are hoping that the storm is going to be wind-driven," the source says.
There also seem to be concerns in some circles that the source of the data the CCRIF uses for its calculations comes only from the Miami Hurricane Center. The local Doppler radar gives more reliable data, local weather experts say, and might be able to give better readings of the intensity of the hurricane than those provided by the Miami Hurricane Center. Countries like Cuba that do not have access to the Miami Hurricane Center have been using this type of radar effectively to track storms.
Data fed to miami
In an emailed correspondence to The Sunday Gleaner, Dr Simon Young, chief executive officer of Caribbean Risk Managers Limited, which operates the CCRIF, discloses that data from the Doppler radar are usually fed to the Miami Hurricane Center and mixed with other data on which the CCRIF draws.
But the local radar might not have been in operation during Hurricane Dean.
Since its introduction to Jamaica in 1999, the radar has had a series of problems and it is not clear whether the equipment was in service during Hurricane Dean, as it has been out of service since last year. The former government procured the radar for approximately $40 million. It is currently out of service, but local meteorologists expect it to be operational for the upcoming hurricane season that is less than two months away.