Regional Hurricane Insurance Fund needs tweaking, CARICOM official Says
By The Bahama Journal
Tue, 25 Mar 2008, 14:58
Source: http://www.jonesbahamas.com/?c=45&a=16406
Hurricane season - dreaded by many - is almost two months away, and while many Bahamians do not seem to be preparing for possible property damage from strong storms just yet, CARICOM officials are.
Noting the massive devastation caused by storms in the region last year, Economic Advisor to the Secretary General of CARICOM, Dr. Maurice Odle, said the Caribbean Catastrophe Risk Insurance Facility [CCRIF] needs some important policy changes before the 2008 Hurricane season begins.
"As you know we've had an increase in incidents of hurricanes in the region and as a result of the mandate from the heads, we have managed with the assistance of the World Bank and other donors to set up the Caribbean Catastrophe Risk Insurance Facility," he said.
The CCRIF was launched at a donor pledging conference in Washington, DC last year.
The Bahamas set aside a $1.2 million contribution in its 2007/2008 budget for the initiative, designed to help countries struck by natural disasters recover from their devastating losses and begin the path to restoration.
The World Bank, which helped CARICOM to set up the US$110 million CCRIF, noted that countries in this region are highly exposed to adverse natural events which can result in disasters affecting their entire economic, human and physical environment.
The CCRIF was established following the devastation of Hurricane Ivan and is said to represent an important shift from disaster response to disaster management and mitigation.
Under the mechanism governments are to purchase catastrophe coverage akin to business interruption insurance that would provide them with an early cash payment after a major hurricane or earthquake.
Dr. Odle pointed out that the region has had some advantages since the inception of the fund, but said authorities had one or two problems with the facility which was established in June last year.
"We are not too happy with the fact that when we had a hurricane last year, the figuring point was on the basis of wind speed and there was total neglect to the fact that there was a lot of flooding connected with that hurricane," he said.
"Countries are reviewing the process and the Royal Bank is going to make a presentation with respect to how the system is being adapted to account these concerns of the member states."
Dr. Odle was speaking during a press conference leading up to the 19th inter-sessional meeting of the conference of heads of government, recently held at Sheraton Cable Beach Hotel and Resort earlier this month.
For 2008, several new measures have been approved for implementation. The board of directors recently agreed that premiums charged to participating governments will be decreased by ten percent and the minimum attachment point available for hurricane policies will decrease from coverage provided for one in 20 year events to one in 15 year events.
Maximum available coverage will increase from US$50 million to US$100 million per peril and, when a policy is triggered, a minimum payout will be made equivalent to the amount of the annual policy premium. Payouts will also be speeded up so that legitimate claims can be settled in as little as 14 days.