All 16 members of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) renewed their policies for hurricane and earthquake coverage for 2010/2011.
According to a press release the policies were renewed on June 1, the start of the hurricane season. The National Oceanic and Atmospheric Administration forecast estimates an 85% chance of an above normal hurricane season this year which could have serious implications for Caribbean islands and potential losses, especially in the light of the poor economic conditions still affecting the region.
For 2010/2011 policy pricing was again reduced as part of CCRIF’s planned strategy to minimise premium costs to its participating countries. In the light of the “exceptional fiscal challenges which the region continues to face this year due to the global economic crisis” CCRIF explored a number of channels, both internal mechanisms and engaging the donor community, to ease the premium burden on participants.
One change that has been implemented in the new policies is that they are now based on CCRIF’s second generation model which represents the levels of hurricane and earthquake risks faced in the Caribbean region at higher resolution than the initial model. For example, the hurricane model now explicitly includes losses due to storm surge. Also, completion of the new modelling platform will also enable it to more easily develop and implement additional products beyond hurricane and earthquake coverage such as excess rainfall product which is expected to be available by year-end.
“These two factors contributed to some changes in coverage characteristics selected by governments and also led to a general increase in coverage limits for the 2010/2011 policies,” the release said. It also said most countries maintained premiums at the same level as last year. As a result of increased appreciation of seismic risk following the Haiti earthquake in January, 12 countries increased their coverage limit for earthquakes.
Recognising that current policies provide a cost-effective solution for just one part of the larger comprehensive disaster management process, CCRIF continues to develop partnerships throughout the region and around the world to assist in better understanding and implementation of a broad range of disaster risk management tools to support sustainable development in the light of growing natural catastrophe risk, the release said.
