The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government wants to renegotiate the way payouts from a Caribbean disaster insurance facility are triggered by dividing the Bahamas into zones, it was revealed yesterday.

K Peter Turnquest, the Deputy Prime Minister, said the Government wanted to revise the payout “trigger points” with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) to maximise the potential insurance payout following a major hurricane.

The Bahamas is due to receive a $234,000 Hurricane Irma-related payout from CCRIF, which the Christie administration previously withdrew from. While the payment is due to be made within the next two weeks, this sum is less than 1 per cent of total Irma-related payouts by CCRIF, and represents a fraction of the multi-million dollar sum required to repair damage in Ragged Island, Inagua and Acklins.

Mr Turnquest told Tribune Business yesterday: “I’m at least pleased that we are able to get something back, which will help us to carry out some of the restoration work that needs to happen.

“That money will go into the NEMA account to be distributed for reconstruction work. There are trigger points that attach to this programme, and until you reach that level you don’t benefit from the full recovery effort.”

With the Opposition likely to challenge the Government’s decision to renew the Bahamas’ policy with CCRIF, not least because the premium sum is understood to have increased from $900,000 to between $2.6-$2.8 million, Mr Turnquest said it wants to reform how this nation is treated.

“With insurance, you pay hoping that you never need it. Last year, according to the CCRIF, if we had participated in the programme we would have gotten a $34 million payout,” Mr Turnquest said.

“This year, fortunately for us, we didn’t get a direct hit or significant impact to our major population centres, and that lessens the payout. It’s a part of the programme and how insurance works; we understand that. At the same time we have to have the peace of mind that if there is a significant hit we are going to have some way of assisting.”

Mr Turnquest said the Government has indicated to CCRIF that it wants to renegotiate the way in which the policy is triggered. “We have indicated to the CCRIF that we want to renegotiate the way the attachment points work, because the present programme does attach at different points based on population and because of the way out country is laid out,” he explained.

“Until you get into New Providence, Grand Bahama, Abaco and maybe Exuma, it’s difficult to reach those trigger points. What we want to do is see if we can create three different zones - a southern, central and northern zone - so there are different trigger points in those various zones, and that would give us more of a recovery opportunity.

“They have agreed to have those conversations with us, and whether we are successful we will see, and we will continue to negotiate on that basis.”

The former Christie administration had ceased paying an annual $900,000 premium to CCRIF after its advisers suggested that the likelihood of ever receiving a payout was “almost zero”.

Following Hurricane Matthew’s passage on 2016, Michael Halkitis, then-minister of state for finance, said the Government had ceased the annual premium payments because the Bahamas would only have received compensation in the event of a Category Five hurricane.

Matthew came through the Bahamas as a Category Three/Four storm, and Mr Halkitis said the Christie administration had decided to drop CCRIF participation and establish its own disaster fund as “the threshold was just too high”.

The increased $2.6-$2.8 million premium, combined with the relatively low $234,000 recovery, is likely to raise questions - especially from the Opposition - as to whether the Government was wise to reverse course and renew with CCRIF.

Controversy over the former administration’s decision to exit the CCRIF facility was stoked during the Budget debate, when Prime Minister Dr Hubert Minnis read out a letter from its chief executive suggesting the Bahamas had missed out on a $32 million Matthew payout.

Dr Minnis told Parliament: “He (the CEO) wrote: ‘We are pleased that the Bahamas has been a member of CCRIF since its inception in 2007. We are pleased that the Government purchased tropical cyclone (hurricane) policies every year between 2007 and 2014, and also purchased policies for both tropical cyclones and excess rainfall for the 2015-2016 policy year.

“However, we deeply regret that the Government decided not to renew its CCRIF policies for the 2016-2017 year, resulting in the Bahamas missing out on two CCRIF payouts from Tropical Cyclone Matthew.’”

Dr Minnis added: “I note that the annual policy for this insurance facility was approximately $900,000. I was shocked by what the CEO of the Caribbean Catastrophe Risk Insurance Facility went on to say in his letter.

“He stated: ‘Based on the registered losses, it means that had the Government of the Bahamas renewed its tropical cyclone policy for 2016-2017, using the previous year’s policy conditions, the policy would have triggered, resulting in a payout of approximately $31.8 million, equal to the coverage limit’.”

This would have been the single biggest payout, according to the Prime Minister, ever made by CCRIF to any country.

The Bahamas’ excess rainfall policy would also have been triggered, resulting in a payout of $855,874. Those payouts would have been larger depending on the coverage purchased, Dr Minnis said.

The Government subsequently renewed the CCRIF policy, and talked about a maximum $35 million payment that could have been triggered had Irma made a direct hit on this nation.