 The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is a parametric insurance facility, owned, operated and registered in the Caribbean for Caribbean governments. It insures government risk and is designed to limit the financial impact of catastrophic hurricanes and earthquakes to Caribbean governments by quickly providing short term liquidity when a policy
is triggered.
It is the world’s first regional insurance fund, giving Caribbean governments the unique opportunity to purchase earthquake and hurricane catastrophe coverage not available elsewhere and with lowest-possible pricing.
In June 2007, at the start of the Atlantic hurricane season, the CCRIF was launched. By pooling their risk, the governments saved approximately 40% on what each government would have paid had they negotiated individually through commercial insurance markets.
The CCRIF was conceived to exist as a captive insurer and the Cayman Islands were selected as its domicile.
In its first year of operation the CCRIF paid out approximately USD 1mn to Dominica and St Lucia in the aftermath of the November 2007 earthquake that shook the Eastern Caribbean.
For renewal of the programme in 2008, a minimum payment clause has been introduced so that once a policy triggers, a minimum payment of an amount equal to the annual premium will be made. Available coverage per peril has also been increased from USD 50mn to USD 100mn, and premiums for countries renewing their policies have been reduced by around 10%.
With a view to the future, the World Bank, in partnership with CCRIF, is sponsoring a feasibility study for a rain/flood policy to be
offered through CCRIF to its participants.
The CCRIF does not involve local insurers or regulators, but undoubtedly represents a significant step by Caribbean nations to protect their economies against catastrophic events.
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