Caribbean storms show urgency of rethinking aid for small island states

Aftermath of Hurricane Irma in Tortola, BVIs (Photo via OECS)
Aftermath of Hurricane Irma in Tortola, BVIs (Photo via OECS)

A series of devastating storms in the Caribbean has highlighted the vulnerability of small island states, where a single hurricane can undo years of development and plunge prosperous households into poverty from one day to the next.

Hurricane Irma turned 90 percent of homes on Barbuda to rubble and left financial losses of USD 100-200 million. Hurricane Maria has knocked out power to the entire US territory of Puerto Rico.

For most developed countries, a natural disaster triggers action from national governments to provide emergency relief and compensation – witness the recent emergency spending provided by the US Congress following Hurricanes Harvey and Irma. But unlocking emergency funds is not always straightforward for small island developing states, not all of which have easy access to capital markets. Small island states often have high public debt ratios and insurance coverage among households and businesses can be limited.

Grenada is still paying the consequences of being hit successively in 2004 and 2005 by Hurricanes Ivan and Emily. Estimated losses amounted to 200 percent of gross domestic product, and Grenada is still in “debt distress” according to the International Monetary Fund. The Cook Islands are still subject to austerity measures under a 1998 debt restructuring agreement prompted by the reconstruction costs that followed Cyclone Martin two decades ago.

Read more at: Organisation for Economic Cooperation and Development

CCRIF to make US$19M payout to Dominica following passage of Hurricane Maria

Damage to homes and vehicles in wake of  Hurricane Maria
Damage to homes and vehicles in wake of Hurricane Maria

Grand Cayman, Cayman Islands, September 22, 2017. CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) announced today that Dominica will receive a payout of US$19,294,800 under its tropical cyclone policy following the passage of Hurricane Maria on September 19. This payout will be made within 14 days of the hurricane.

CCRIF was designed to provide quick liquidity to governments of the Caribbean and Central America following catastrophic impacts from tropical cyclones, earthquakes and excess rainfall. Dominica also holds an excess rainfall policy with CCRIF and assessments as to whether that policy was triggered are ongoing and will be determined in the next few days.

This payout brings the total CCRIF payouts since the start of the 2017 Atlantic Hurricane Season to about US$50.7 million and CCRIF’s payouts since its inception in 2007 to approximately US$120 million.

Devastation in Dominica
Devastation in Dominica
The Caribbean Catastrophe Risk Insurance Facility (CCRIF)
CCRIF SPC is a segregated portfolio company, owned, operated and registered in the Caribbean. It limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and – since 2015 – Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered. It is the world’s first regional fund utilising parametric insurance, giving member governments the unique opportunity to purchase earthquake, hurricane and excess rainfall catastrophe coverage with lowest-possible pricing. CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalised through contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments. In 2014, an MDTF was established by the World Bank to support the development of CCRIF SPC’s new products for current and potential members, and facilitate the entry for Central American countries and additional Caribbean countries. The MDTF currently channels funds from various donors, including: Canada, through the Department of Foreign Affairs, Trade and Development; the United States, through the Department of the Treasury; the European Union, through the European Commission, and Germany, through the Federal Ministry for Economic Cooperation and Development. CCRIF is celebrating its 10th anniversary this year – 2017.
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