Grand Cayman, Cayman Islands — Water utilities in the Caribbean will now be able to access parametric insurance1coverage through CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) 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)2 within CCRIF.
CCRIF is the world’s first multi-country, multi-peril risk pool providing parametric insurance and offers products to 19 Caribbean governments, 4 Central American governments and 3 Caribbean electric utilities. CCRIF offers 5 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 6th parametric insurance product on offer.
CWUIC SP has been in the making for the last two years, with the Inter-American Development Bank (IDB) providing technical and financial support for the structuring of CWUIC, and CCRIF undertaking the modelling work to develop the insurance model that will underpin the water utilities insurance product and allow CWUIC to provide insurance coverage to water utilities. Other key partners in this initiative are the UK Foreign, Commonwealth and Development Office (FCDO), and the Caribbean Development Bank (CDB).
A total of US$8.45M of grant resources has been mobilized for CWUIC SP. This includes US$7.8M from the IDB, of which US$5.6M was provided by the UK Government through the FCDO to support technical assistance to finalize the structuring of CWUIC SP and provide premium subsidies for the insurance coverage to water utilities in 6 Caribbean countries. CDB has approved grant funds of US$650,000 in technical assistance.
FCDO has also provided development aid to CCRIF, in the amount of US$25M, to capitalize CWUIC SP. This will be used in combination with reinsurance to protect CWUIC SP against unexpected losses from policy claims. This US$25 million facility provided by FCDO to CCRIF is interest-free with repayment after a 20-year period.