Director of Projects at the Caribbean Development Bank (CDB) Daniel Best says between 2007 and September 2017, Caribbean Catastrophe Risk Insurance Facility (CCRIF) disbursed approximately US$119 million to Caribbean countries.
Of that amount, approximately US$62 million was disbursed to seven countries during the 2017 hurricane season.
According to Best, the funds are being used by governments to finance the rebuilding of critical infrastructure.
“The CCRIF is now regarded as a cost-effective way to pre-finance short-term liquidity so that recovery efforts can get underway quickly,” he said of the facility that offers Caribbean states a shield against extreme weather through the purchase of catastrophe risk insurance at 40 to 50 per cent less than the cost they would incur, had they approached the insurance market individually.
However, he said that as the CCRIF enters its second decade of operations, additional financing and capital injection are required to support growth and to facilitate scaling up, in terms of offering new products and increasing coverage levels.
Moreover, currently CCRIF covers only about 2.5 per cent of the recommended 25 per cent coverage of the overall government exposure to earthquake and hurricane risks (excluding excess rainfall).
“This limited coverage is constrained purely by the amount of premium that the borrowing member country can afford,” Best explained.
“During the recently concluded United Nations Climate Change Conference, COP23, the Caribbean called on the international community to seriously address issues of loss reduction and to support the recapitalising of institutions like CCRIF. We know that risk transfer mechanisms are tangible means by which developed countries can contribute short-to medium-term funding. These investments are critical, and can improve the capacity of SIDS (Small island development states) to adapt to climate change.”
Acknowledging the CDB’s commitment, the director of projects said the bank examines what is required to assist the countries affected by the recent hurricanes, and does so cognisant of the tremendous funding requirements for rehabilitation and reconstruction.
“It is a challenge that can be tackled through a well-orchestrated response by the development community to maximise the impact of our assistance in the recovery process. We believe that there is opportunity in partnership — to leverage our individual strengths to achieve even greater and more robust development impacts. Building the region’s resilience to climate change should be the centrepiece of this coordinated response.”
Best further revealed that the bank will employ a combination of very concessional resources from its Special Development Fund — from existing trust funds; and from its Ordinary Capital pool of resources. These resources have, in some instances, already supported, and will be further targeted to assist Anguilla, Antigua and Barbuda, the British Virgin Islands, Dominica, and the Turks and Caicos Islands.
“We recognise that the resources we have available for disaster management are grossly inadequate relative to the sizeable resource needs of the region. This is why we continue to work diligently to develop as suitable a proposal as possible — as quickly as possible,” he noted.