CCRIF SPC Technical Workshop Focuses on Parametric Insurance

CCRIF SPC held a 2-day technical workshop on parametric insurance and modeling in February for more than 50 attendees, representing 18 CCRIF Caribbean member countries and 2 regional organizations.

The event, which was held in Florida, was intended to deepen attendees' knowledge and understanding of CCRIF's parametric insurance models and products. CCRIF also used the gathering to share information on upgrades to its tropical cyclone, excess rainfall, and earthquake models expected to underpin the facility's policies for the 2023–2024 policy year, which begins June 1.

An additional 16 individuals from member countries and regional organizations participated in the workshop virtually. Workshop participants included officials from ministries of finance, meteorological officers, and disaster risk managers.

Among the workshop sessions was an examination of the evolution of CCRIF's parametric insurance models. Over the years, those models have moved from off-the-shelf models to CCRIF-customized models and finally to models that are fully owned by CCRIF and designed specifically for the Caribbean and Central American countries.

As new data and changes and improvements in model development emerge, CCRIF upgrades its models to ensure that its members can purchase parametric insurance policies underpinned by the best models of the time, reducing the incidence of the basis risk inherent in parametric insurance, a CCRIF statement said.

Since its inception in 2007, CCRIF has made 58 payouts, totaling $260 million to 16 of its 24 members. During the 2022 Hurricane Season, CCRIF made four payouts totaling $15.2 million to three of its member governments, all within 14 days of the event.

Previously known as the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company, CCRIF SPC is a segregated portfolio company that is owned, operated, and registered in the Caribbean. It limits the financial impact of such disasters as catastrophic hurricanes, earthquakes, and excess rainfall events on Caribbean and Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered.

CCRIF's parametric insurance was specifically designed to cover high-intensity, low-frequency events and provide quick liquidity within 14 days of an event if a policy is triggered.

CCRIF SPC was developed under the technical leadership of the World Bank and with a grant from the government of Japan. It was capitalized through contributions to a multidonor trust fund by the government of Canada, the European Union, the World Bank, the governments of the United Kingdom and France, the Caribbean Development Bank, and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments.