Caribbean Cat Facility, CCRIF, Pays Nicaragua $1.1M for Hurricane Otto
CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) made a payout of US$1.1 million to the government of Nicaragua as a result of damages from Hurricane Otto.
Damages triggered a CCRIF payment on the country’s tropical cyclone policy, which was made on Dec. 9 – just two weeks after the hurricane hit, the CCRIF said in a statement.
There were reports of dozens of houses damaged, fallen trees, floods, landslides and interruptions in potable water and electricity supplies, according to the Nicaragua’s Disaster Management Agency (SINAPRED). The government of Nicaragua evacuated approximately 10,572 people prior to the arrival of Hurricane Otto.
This is the second payment made to Nicaragua – the first was a payment of $500,000 after the magnitude 6.1 earthquake on June 9 of this year. The earthquake occurred 114 km (71 miles) northwest of Managua, Nicaragua’s capital city.
Nicaragua was the first Central American country to join CCRIF when the government signed a Participation Agreement in 2015 and purchased tropical cyclone and earthquake coverage. This was facilitated by the signing of a Memorandum of Understanding between CCRIF and COSEFIN (the Council of Ministers of Finance of Central America, Panama and the Dominican Republic) in April 2015 that allowed those countries to access the catastrophe coverage provided by CCRIF.
Since its inception in 2007, CCRIF has made a total of 22 payouts to 10 member governments totaling US$69 million, all within 14 days of the event. This year, CCRIF made nine payouts totaling over US$31 million on six member countries’ tropical cyclone, excess rainfall and/or earthquake policies for four events: Hurricane Earl, the June 9 Nicaragua earthquake, Hurricane Matthew and Hurricane Otto.
Like all CCRIF policies, Nicaragua’s tropical cyclone policy is a parametric insurance product, which makes payments based on hurricane wind speed and the amount of loss calculated in a pre-agreed model, the CCRIF said, noting that with such parametric policies, payouts can be made very quickly after an event.
“This is different from traditional insurance policies that would make a payment only after an adjuster conducts an on-the-ground assessment of individual losses after an event, which can often take months or even years,” the statement continued.
“The CCRIF Board and Team hope this payment will provide some relief and we stand ready to support the government and people of Nicaragua as they recover from the effects of this hurricane,” stated CCRIF CEO Isaac Anthony.
CCRIF SPC is a segregated portfolio company, owned, operated and registered in the Cayman Islands. It limits the financial impact of catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and – since 2015 – Central American governments by quickly providing short-term liquidity when a parametric insurance policy is triggered. CCRIF said it is the world’s first regional fund utilizing parametric insurance, giving member governments the opportunity to purchase earthquake, hurricane and excess rainfall catastrophe coverage with lowest-possible pricing.