Caribbean Catastrophe Risk Insurance Facility – Putting 2020 in perspective: How we leveled-up and pivoted in the face of Covid-19 and the increasing effects of a changing climate on our members

As with any new year, 2020 held much promise. Indeed, it was the beginning of a new decade and highlighted by the United Nations as the Decade of Action. At the Caribbean Catastrophe Risk Insurance Facility (CCRIF), we were ready to play our part as an organization in advancing the development prospects of our members and effectively contributing to the achievement of those sustainable development goals (SDGs) that related specifically to our vision and mission. On New Year’s Eve 2019, many of us heard for the first time in the media of a new virus in China and throughout the early weeks of 2020, the news became filled with emerging cases in other countries.

At the start of each year, it is customary for the CCRIF management and team to meet to reflect on the previous year and to chart the way forward – reflecting on our achievements and disappointments – turning both into lessons learned and taking corrective action where necessary, all within the spirit of continuous improvement. This meeting also presents an excellent opportunity for us to reflect on regional and international issues and opportunities especially since we kick-off our policy renewals with our members in March of each year.

Thus, as a team we were able to reflect briefly on this “new virus” with cases increasing daily and slowly spreading country by country. At our discussions, the number of cases in China stood at a little over 500. Notwithstanding, we discussed briefly what would happen if that virus were to become a global pandemic and the possible potential of it actually becoming a pandemic. Two months later, in March 2020, the first cases were diagnosed in the Caribbean and Central America. We were ready – ready to put in place strategies to ensure that our members would be in a position to renew their parametric insurance policies – for tropical cyclones, excess rainfall and earthquakes. Our readiness was buttressed by the fact that we have operated, since our inception in 2007 as a virtual company and have been always fully engaged with our members and stakeholders in the virtual space almost daily and face-to-face from time to time. This advantage presented one less hurdle for our operations during the pandemic.

As a development insurance company, whilst we always strive to ensure that we play a key role in helping our members achieve their developmental prospects,  we also recognize that this thrust is even more important in 2020, as we confront the challenges posed by the 3Cs – climate change and COVID-19. But how were we able to support our members in the face of the 3Cs? Firstly, we levelled up… determined as always to assist our member governments to enhance their resilience to natural hazards.

We moved swiftly and developed the Facility’s Covid-19 Response Plan. This response plan enabled us to put in place strategies and actions to assure our members that our top priority continued to be to serve them and ensure that we would be able to fulfill our value proposition of providing quick liquidity within 14 days of a natural hazard event if a member’s policy is triggered. In this way members could begin the process of recovery immediately and fill the liquidity gap after a disaster.

As part of this response plan, we engaged with members and the donor community to assess needs and avenues for possible premium support – bearing in mind that from as early as March the restrictions imposed by governments to reduce the spread of the virus also had the dual effect of significantly reducing the income of countries. For example, restrictions imposed on air travel had significant impacts on the revenues to the tourism sector which for many of our members are their main income earner.

By June 2020, our international development partners stepped forward to support member governments to cover portions of their CCRIF parametric insurance costs for the 2020/21 and 2021/22 policy years. The European Union provided a grant of €10 million (US$11 million) to CCRIF for premium support or increasing coverage for its Caribbean members, the Central America and Caribbean Catastrophe Risk Insurance Program Multi-Donor Trust Fund provided a grant of up to US$10 million to COSEFIN[1] member countries for premium support for policy years 2020/21 and 2021/22, and the Canada-CARICOM[2] Climate Adaptation Fund provided funding of US$12.4 million to seven Caribbean CCRIF members to cover a portion of their parametric insurance premium costs and to two potential members if they joined CCRIF. CCRIF also provided its member governments with a 5 per cent discount on gross premium for tropical cyclone coverage and a further discount of 15 per cent on additional coverage purchased for increased tropical cyclone and/or earthquake coverage for the 2020/21 policy year.

In early June, we announced that our member governments had renewed their parametric insurance coverage for tropical cyclone, excess rainfall, earthquake and fisheries ahead of the hurricane season, ceding over US$1 billion in risk to CCRIF for the first time and increasing overall coverage by 8 per cent. As we are well aware, the 2020 Atlantic Hurricane Season has been the most active Atlantic hurricane season on record in terms of the number of tropical cyclones – recording over 30 named storms, including 14 hurricanes with 7 of them being major hurricanes – and, along with the 2005 season, is the only hurricane season to feature the Greek letter storm-naming system. Also, whilst the hurricane season officially starts on June 1 each year, the 2020 season witnessed pre-season cyclones Arthur and Bertha on May 16 and 27 respectively.

During this hurricane season, CCRIF made 6 payouts to 4 member governments totaling a little over US$41.8 million. One member, Nicaragua, received three payouts during the season having been significantly impacted by tropical cyclones Eta and Iota. Since its inception in 2007, CCRIF has made a total of 48 payouts to 14 of its member governments, totaling approximately US$194 million. CCRIF’s payouts provide quick liquidity to governments immediately following a natural disaster, allowing them to address their most immediate needs. CCRIF’s assessments on the use of payouts have shown that over 2.5 million persons have benefitted from CCRIF payouts, which have been used by governments over the years to provide food, water, medication and shelter for the most vulnerable in their populations, and for immediate repair to damaged roads and other critical infrastructure, among other uses.

And we also pivoted. Some of our programmes to support disaster risk management in the region such as our internship programme were not able to be executed due to the various restrictions such as the work from home orders. We were pleased that in collaboration with The University of the West Indies, we were able to deliver a 4-day course in disaster risk financing for young persons – university students and recent graduates, who typically benefit from CCRIF internships. Over 85 young persons participated in the course and received 1.5 continuing education credits. We are extremely proud that we were able to increase the understanding of disaster risk financing amongst these young persons.

Through our Technical Assistance Programme, we were also able to pivot and make adjustments to our budget to provide additional financial support to students of The University of the West Indies to cover their tuition fees; due to the COVID-19 pandemic these students were finding it difficult to pay and were at risk of either being de-registered or not completing their studies. This is an example of our thrust to build the capacity of the region and a cadre of professionals in the areas of disaster risk management and climate change adaptation.

2020 has indeed been an extraordinary year globally, and more so for our member countries in the Caribbean and Central America, which are grappling with the effects of the 3Cs. We look forward to 2021, knowing that sunnier days are ahead as we are already seeing strong signs of hope everywhere and a spirit of togetherness.


[1] Council of Ministers of Finance of Central America, Panama and the Dominican Republic

[2] Caribbean Community