(Barbados Nation) Barbados is among eight Caribbean countries that have become the first in the region to purchase “excess rainfall insurance coverage” from the Caribbean Catastrophe Risk Insurance Facility (CCRIF).
CCRIF made the announcement last week, pointing out that the coverage is for the 2014/2015 policy year. In addition to Barbados, the countries now covered from excess rainfall were Anguilla, Haiti, Dominica, Grenada, St. Kitts & Nevis, St Vincent & the Grenadines, and St Lucia.
Developed by CCRIF and global reinsurer, Swiss Re, the excess rainfall product is aimed primarily at extreme high rainfall events of short duration (a few hours to a few days), whether they happen during a tropical cyclone (hurricane) or not, CCRIF said.
It added that like its tropical cyclone and earthquake insurance, the excess rainfall product is parametric and estimates the impacts of heavy rain using satellite rainfall data from the Tropical Rainfall Measurement Mission (TRMM) and exposure from CCRIF’s risk estimation database.
TRMM is a research initiative undertaken by the United States National Aeronautics and Space Agency and the Japan Aerospace Exploration Agency. Officials explained that “because the excess rainfall product is parametric, a payout can be made quickly (within 14 days) after a rain event that triggers a country’s policy, without waiting for time-consuming damage and loss assessments on the ground.
“The new excess rainfall product has been eagerly awaited by Caribbean governments as we all realise that considerable damage in the region is caused by rainfall and flooding. This product complements CCRIF’s hurricane coverage which determines losses based on wind and storm surge,” CCRIF chief executive officer Isaac Anthony said.
CCRIF officials also announced that “taking into consideration the fiscal challenges that many of our members face and their increasing levels of vulnerability, CCRIF continues to work towards reducing the overall premium cost to members”.
“To this end, for the 2014-2015 policy year, CCRIF offered two one-off premium discount options due to a third successive year in which none of the policies held by member countries were triggered by an event. The two discount options were: a 25 per cent discount on tropical cyclone and earthquake policy premium if no excess rainfall policy is purchased; and up to a 50 per cent discount if applied to an excess rainfall policy,” it said.
“Also, as done previously, for 2014/2015 policies, CCRIF allowed 50 per cent of the total premium to be held as paid-in participation fee (the one-time fee paid when a country joins the facility), with the excess therefore being available to co-fund premium, providing an opportunity to further reduce current expenditure on policy premiums.