The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Caribbean water utilities such as the Water & Sewerage Corporation can now access insurance coverage to protect their infrastructure assets against hurricanes and severe flooding, it was announced yesterday.

The former Caribbean Catastrophe Risk Insurance Facility, now known as CCRIF, said in a statement that $8.45m in grant funding has been mobilised to create the Caribbean Utility Insurance Collective (CWUIC). This has been specifically established as a segregated portfolio entity within CCRIF to provide parametric insurance to the region’s water utilities.

The grant financing has been sourced from entities such as the Inter-American Development Bank (IDB), the UK Foreign, Commonwealth and Development Office (FCDO), and the Caribbean Development Bank (CDB).

The statement said: “Water utilities in the Caribbean will now be able to access parametric insurance coverage through CCRIF SPC to financially protect them against extreme weather events such as hurricanes, tropical storms and excess rainfall events. The Caribbean Water Utility Insurance Collective (CWUIC) has been established as a segregated portfolio (SP) within CCRIF.

“A total of $8.45m of grant resources has been mobilised for CWUIC SP. This includes $7.8m from the IDB, of which $5.6m was provided by the UK government through the FCDO to support technical assistance to finalise the structuring of CWUIC SP and provide premium subsidies for the insurance coverage to water utilities in six Caribbean countries. CDB has approved grant funds of $650,000 in technical assistance.”

CCRIF will offer parametric insurance to 19 Caribbean countries, four Central American counties and three regional electric companies. A $25m facility was also provided by FCDO to protect against unexpected claims, and this interest-free sum will be repaid over the next 20 years.

The statement added: “CCRIF is the world’s first multi-country, multi-peril risk pool providing parametric insurance, and offers products to 19 Caribbean governments, four Central American governments and three Caribbean electric utilities.

“CCRIF offers five parametric insurance products: For tropical cyclones, excess rainfall, earthquakes, for the fisheries sector and the electric utilities sector for transmission and distribution. The water utilities product will be CCRIF’s sixth parametric insurance product on offer.

“FCDO has also provided development aid to CCRIF, in the amount of $25m, to capitalise CWUIC SP. This will be used in combination with reinsurance to protect CWUIC SP against unexpected losses from policy claims. This $25m facility provided by FCDO to CCRIF is interest-free with repayment after a 20-year period.”

Some 35 water utilities in 29 Caribbean territories have been identified to participate in the new initiative, which aims to support the industry in emergency response, restoration and rebuilding post-disaster. The effort will provide parametric insurance to help water utilities recover from natural disasters, and provide technical assistance and structure projects to build water utility resilience.

CCRIF said: “The story of the Caribbean region’s vulnerability to hydro-meteorological hazards such as hurricanes, tropical storms and excess rainfall is well known, and the impacts of these events are being exacerbated by climate change, which is increasing their frequency and intensity.

“Following natural disasters, the infrastructure and equipment of water utilities, such as pumping stations and intake valves, may be significantly impacted and/or destroyed, often due to the high levels of turbidity and accompanying flooding.

“Water utilities across the region have limited financial resources and often-times are unable to recover in a timely manner to provide safe drinking water and sanitation services following natural disasters. The importance of potable water following a natural disaster cannot be emphasised enough, and is key to avoiding the incidence of water-borne diseases which are often associated with these natural disaster events.”

CCRIF added that it has paid out over $261m in claims since 2007, and is committed to providing funds within 14 days.

“A dedicated disaster risk financing and management facility for the water and wastewater sector will bring immeasurable benefits and dedicated resources for water utilities to respond to their most pressing needs following a natural disaster. CCRIF is committed to providing payouts within 14 days after a member’s policy is triggered and, since its inception in 2007, CCRIF has made 60 payouts totalling $261.8m to 16 of its member governments,” said CCRIF.

David Rutley, UK minister for the Americas and Caribbean, said: “The people of the Caribbean are on the frontline of natural disasters, which are increasing in frequency due to climate change. This first-of-its-kind scheme will enable Caribbean countries to maintain essential services in the face of storms and floods, while greatly reducing the financial burden on individual governments.

“The UK is determined to play its part in helping small island developing states build resilience to extreme weather events with access to fairer and reliable funding.”