Grand Cayman, Cayman Islands — CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) paid US$261,073 to the Government of Belize under its excess rainfall insurance policy last Thursday, two weeks after heavy rains brought by Hurricane Earl drenched the country on August 4 and 5.

The payout, CCRIF said, demonstrates its commitment to act within two weeks after a qualifying hazard event.

Earl caused widespread flooding, damage to homes and businesses, interruptions of water and electricity services, and losses to the tourism and agriculture industries across Central America.

“The CCRIF board and team are relieved that there was no loss of life – and we hope that the funds received from CCRIF will be useful to the Government of Belize in their recovery efforts. We wish the Government and people of Belize a rapid recovery,” CEO Isaac Anthony stated.

Belize has both an excess rainfall policy and a tropical cyclone policy with CCRIF.

It purchased the former for the first time for the 2016/17 policy year, which began on June 1. The modelled “Rainfall Index Loss” determined from the level of Hurricane Earl’s rainfall was greater than the attachment point (the deductible) on the country’s excess rainfall policy and therefore the policy was triggered, CCRIF explained.

The tropical cyclone or hurricane policy, meanwhile, is based on modelled losses due to wind and storm surge. Those losses were below the policy attachment point as selected by the Government and therefore that particular policy was not triggered, the insurance said.

“CCRIF’s parametric insurance policies are insurance contracts that make payments based on the intensity of an event (for example, amount of rainfall) and the amount of loss calculated in a pre-agreed model caused by the event. Therefore, payouts can be made very quickly after a hazard event. This is different from traditional insurance settlements that require an on-the-ground assessment of individual losses after an event before a payment can be made,” CCRIF said in a release to the media.

For the policy year 2016/17, CCRIF sold 15 tropical cyclone policies, 11 excess rainfall policies and 13 earthquake policies to its 17 members in the Caribbean and Central America. CCRIF has been providing tropical cyclone and earthquake coverage since 2007 and first introduced its excess rainfall policy in 2013. In 2017, CCRIF expects to bring to market a new policy for drought.

CCRIF limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and – since 2015 – Central American governments by 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. The Central America SP is capitalised by contributions to a special MDTF by the World Bank, European Commission and the governments of Canada and the United States.

Since the inception of CCRIF in 2007, the facility has made 15 payouts totalling approximately US$38.8 million to 10 member governments.

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IMAGE: Residents stand before a collapsed bridge brought down by Hurricane Earl in the Arroyito neighborhood, in Melchor de Mencos, Guatemala, on the Peten border with Belize, Thursday, August 4, 2016. (Photo: AP)