The Caribbean Catastrophe Risk Insurance Initiative : A Review of CCRIF's Operation After Its Second Season

Abstract

This report provides an external
 assessment of the operations of the Caribbean Catastrophe
 Risk Insurance Facility (CCRIF) during its second policy
 year from June 1, 2008 to May 31, 2009. Developed at members
 and associate members of the Caribbean Community
 (CARICOM's) request following the devastation wrought
 on Grenada and the Cayman Islands by Hurricane Ivan in 2004,
 CCRIF was established in May 2007. The World Bank and a
 number of donors contributed to CCRIF's start-up
 capital and also underwrote a portion of some members'
 initial participation fees and premium payments during
 CCRIF's first three policy years. A multi-donor trust
 fund continues to reimburse CCRIF for certain eligible
 expenditures, thus facilitating continued growth of
 CCRIF's reserves and risk-bearing capacity. The report
 aims to contribute to on-going discussions within the
 broader disaster risk management community about the
 possibilities for scaling up the role of CCRIF in the
 Caribbean and replicating or adapting CCRIF's
 innovative model of ex ante disaster risk financing in other
 disaster-prone regions of the world. Rolling out the
 second-generation loss model, the anticipated excess
 rainfall coverage and, possibly, hurricane loss coverage for
 members of Caribbean Association of Electrical Utilities
 (CARILEC) will require intensive interactions with
 CCRIF's members, reinsurance markets, key partner
 institutions, and the media to ensure a common understanding
 of the model and the features, inherent basis risk, and
 benefits of the policies. Increasing CCRIF's
 transparency is also vital to broadening understanding of
 CCRIF's governance structure, modeling, and policy
 coverage and consolidating CCRIF as a well-recognized and
 widely-valued Caribbean institution.