Widespread devastation in GB, Abaco triggered insurance payout
NASSAU, BAHAMAS — The Bahamas will receive approximately U.S. $11 million dollars from the Caribbean Catastrophe Risk Insurance Facility (CCRIF).
CCRIF said in a statement that it will pay The Bahamas US $10,936,103 following the passage of Hurricane Dorian. The Category 5 storm caused widespread destruction on the islands of Abaco and Grand Bahama.
The Bahamas has three tropical cyclone policies with CCRIF, each one covering a section or zone of the archipelago – north west, south east and central. The tropical cyclone policy for the north west zone – which includes the Abaco Islands and Grand Bahama – was triggered.
In 2018, the Bahamian government renegotiated the country’s catastrophic risk insurance, agreeing to a new policy which divided The Bahamas into three distinct zones and structured payouts based on that arrangement.
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 in 2016, Michael Halkitis, the 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 5 hurricane.
Matthew made landfall in the Bahamas as a Category 3/4 storm, and Halkitis said the Christie administration had decided to drop CCRIF participation and establish its own disaster fund as “the threshold was just too high”.
CCRIF is a not-for-profit risk pooling facility, based in Grand Cayman. It offers parametric insurance designed to limit the financial impact of catastrophic tropical cyclones, earthquakes and excess rainfall events on Caribbean governments by quickly providing short-term liquidity when a policy is triggered. CCRIF is the world’s first regional risk-pooling fund issuing parametric insurance and, as such, gives its member governments the opportunity to purchase natural catastrophe coverage at a price substantially below what they would be able to obtain through a non-pooled arrangement.
In the immediate aftermath of the storm, Deputy Prime Minister and Minister of Finance Peter Turnquest said it could take “hundreds of millions, if not billions “to fund the recovery and restoration of Abaco and Grand Bahama”.
This article was written by Business Reporter Natario McKenzie