Caribbean Catastrophe Risk Insurance Facility (CCRIF) renewed for 2009: World Bank transfers portion of catastrophe risk to the capital markets through cat swap
Washington, DC, June 12, 2009 – The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has secured US$132.5 million of claims paying capacity on the international reinsurance and capital markets. The CCRIF was set up to ensure that the governments of its 16 members will have immediate access to liquidity if hit by a hurricane or earthquake.
The risk financing structure consists of the following layers:
- CCRIF retains the first layer of US$20 million;
- Re-insurers underwrite the second (US$15 million) and third layers (US$35 million);
- The top layer (US$82.5 million) is financed with reinsurance (US$52.5 million) plus US$30 million coverage through a catastrophe swap between the World Bank (International Bank for Reconstruction and Development – IBRD) and CCRIF.
About the CCRIF:
The CCRIF was launched in June 2007, on behalf of the Caribbean Community (CARICOM) heads of government and under the guidance of the World Bank with donor funding, to provide immediate liquidity to Caribbean governments after a catastrophic hurricane or earthquake. This regional institution, registered in the Cayman Islands, is the first multi-country risk pool in the world, and is also the first insurance instrument to successfully develop a parametric policy backed by both traditional and capital markets. Since its inception, the CCRIF policies have been renewed annually.
The CCRIF is operated by Caribbean Risk Managers Ltd., with management support from Sagicor Insurance Managers Ltd. The brokerage firm Benfield Ltd. structured the renewed program after being initially appointed as the CCRIF’s sole reinsurance broker in February 2007. The programs reinsurer group has been diversified through the inclusion of Swiss Re, in addition to the existing underwriters which include Munich Re (lead reinsurer), Paris Re and Hiscox of Lloyd’s. The World Bank Treasury (through the International Bank for Reconstruction and Development – IBRD) has arranged for CCRIF to transfer a portion of the catastrophe risk to the capital markets through cat swap transactions.
The CCRIF’s capacity to service claims is based on its own reserves combined with the financial capacity of the international markets. This allows CCRIF to respond to events that may occur only once every 1,000 years or more, achieving a higher level of resiliency than international standards.
The 16 CCRIF participating governments are: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Trinidad & Tobago, Turks and Caicos Islands.
For more information on the CCRIF, please visit: www.ccrif.org and http://web.worldbank.org/external/default/main?pagePK=1497618&theSitePK=339287&contentMDK=21353466&noSURL=Y
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