The Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) says it is to make a first payment of US$7.07 million to Trinidad and Tobago following heavy rainfall in the island earlier this month.
CCRIF SPC, a segregated portfolio company that limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean, said it had been able to determine the value of the pay-out following the rains of October 18-20.
It said that the payment will be made to the government in Port of Spain within 14 days after the end of the event.
Trinidad & Tobago has been a member of CCRIF since 2007 and has purchased CCRIF policies for tropical cyclone and earthquake since 2007.
In recent years, the country has experienced severe hydrological events not associated with hurricanes, resulting in major flooding and loss of property and livelihoods.
“This year, for the first time, the Government purchased a CCRIF policy for Excess Rainfall (XSR) and has two separate XSR policies in place – one for Trinidad and one for Tobago. Following the recent heavy rainfall, the policy for Trinidad triggered,” CCRIF SPC said in a statement.
It said that CCRIF insurance products for earthquakes, tropical cyclones and excess rainfall are parametric and make payments based on the intensity of an event and the amount of loss calculated in a pre-agreed model caused by these events.
“In the case of rainfall, losses are estimated using a model based on amount of rainfall. Hazard levels are then applied to pre-defined government exposure to produce a loss estimate. Pay-out amounts increase with the level of modelled loss, up to a pre-defined coverage limit. Therefore pay-outs can be made very quickly after a hazard event – and in the case of CCRIF, within 14 days after the event.”
CCRIF said that local officials and technocrats in Trinidad have referred to the recent rainfall, which has caused widespread flooding, as “unprecedented”.
It said the pay-out will provide quick liquidity to the government for immediate repairs and recovery efforts. “Countries need to be mindful that CCRIF was not designed to cover all the losses on the ground, but rather to allow governments to reduce their budget volatility and to guarantee sufficient capital for emergency relief. Providing quick liquidity to affected countries post disaster was the main rationale for the establishment of CCRIF in 2007.”
The Caribbean is experiencing the effects of climate change with more frequent and extreme weather events such as hurricanes, rainfall events and drought. This is becoming the new normal. Analysis from an Economic of Climate Adaption (ECA) Study undertaken by CCRIF in 2012 showed that that annual expected losses from wind, storm surge and inland flooding already amounts to up to six per cent of gross domestic product in some countries and that climate change could increase expected loss by one to three per cent of GDP by 2030, the CCRIF SPC added.
It said the pay-out to Trinidad and Tobago brings the total CCRIF pay-outs in 2017 to approximately US$61.5 million, which includes US$30.8 million for Hurricane Irma and US$23.6 million for Hurricane Maria.
Last week, the government announced a TT$35 million (One TT dollar=US$0.16 cents) fund to compensate victims of the floods.