Sun | Oct 1, 2023

Regional water utilities to access insurance coverage against extreme weather

Published:Tuesday | September 19, 2023 | 9:12 AM
Approximately 35 water utilities in 29 territories in the Caribbean have been identified as potential clients for CWUIC. - CMC photo

GRAND CAYMAN, Cayman Islands, CMC – The Caribbean Catastrophe Risk Insurance Facility (CCRIF) says water utilities in the Caribbean will now be able to access parametric insurance coverage to financially protect them against extreme weather events such as hurricanes, tropical storms and excess rainfall events.

It said the Caribbean Water Utility Insurance Collective (CWUIC) has been established as a segregated portfolio within CCRIF.

CCRIF is the world's first mufti-country, mufti-peril risk pool providing parametric insurance and offers products to 19 Caribbean governments, four Central American governments and three Caribbean electric utilities.

It also offers five parametric insurance products for tropical cyclones, excess rainfall, earthquakes, for the fisheries sector and the electric utilities sector for transmission and distribution. The water utilities product will be CCRIF's sixth parametric insurance product on offer.

“CWUIC benefits from CCRIF's 16-year experience of offering parametric insurance policies to provide coverage against natural hazards to governments as well as Caribbean electric utility companies,” said CCRIF chief executive officer, Isaac Anthony.

CCRIF said that CWUIC has been in the making for the last two years, with the Inter-American Development Bank (IDB) providing technical and financial support for the structuring and CCRIF undertaking the modelling work to develop the insurance model that will underpin the water utilities insurance product.

Approximately 35 water utilities in 29 territories in the Caribbean have been identified as potential clients for CWUIC.

CCRIF said that the vision for CWUIC goes beyond insurance and it has been designed as a centre of excellence for disaster risk management and financing for water utilities and has three components, namely to support to water utilities in emergency response planning and restoring and rebuilding post-disaster as well as provide parametric insurance to help water utilities to respond to and recover from natural disasters.

In addition there is the provision of advisory services and technical assistance to identify and structure priority projects to build water and wastewater utilities' resilience to natural hazards. Under this component, the IDB received US$500,000 from the Coca-Cola Foundation to conduct feasibility studies on water utility projects that promote resilience.

CCRIF said that access to quick liquidity following a natural disaster will be key for water utilities as this will ensure that they will be able to restore water supply in the shortest possible time.

In fact, several years ago, a payout to one of CCRIF's members in the Eastern Caribbean under their tropical cyclone insurance policy was used to quickly repair that country's main water treatment plant which was a feeder for other plants on that island.

CCRIF said it is committed to providing payouts within 14 days after a member's policy is triggered, and since its inception in 2007, CCRIF has made 60 payouts totalling US$261.8 million to 16 of its member governments.

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