St. Kitts and Nevis' Financial Secretary, Mrs. Janet Harris, issued a statement from the World Bank stating that as from June 1st 2007, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) was launched June 1, coinciding with the start of the 2007 Atlantic Hurricane season for which forecaster expect 17 named storms - well above long term average.
The CCRIF provides participating Caribbean governments with immediate access to funds if hit by a hurricane or earthquake.
"Thanks to the support of the international financial markets and all parties involved, insurance coverage can be confirmed to participating countries on June 1," said Caroline Anstey, World Bank Country Director for the Caribbean. "This new Facility is being launched just in time for the beginning of the 2007 hurricane season, which according to the experts, may be particularly severe."
The CCRIF is operated by Caribbean Risk Managers Ltd., with captive management support from Sagicor Insurance Managers Limited.
CCRIF was able to secure US$110 million of claims paying capacity on the international reinsurance and capital markets. The reinsurance structure consists of four layers: CCRIF retains the first layer of US$10 million; reinsurers underwrite the second (US$15 million) and third layers (US$25 million); the top layer (US$70 million) is financed with reinsurance (US$50
million) plus US$20 million coverage through a catastrophe swap between the World Bank (IBRD) and CCRIF. ~~Adz:Right~~
IBRD hedged its risk through a companion swap with Munich Re Capital Markets. The US$20 million swap between IBRD and CCRIF is the first transaction to enable emerging countries to use a derivative transaction to access the capital market to insure against natural disasters. It is also the first time a diversified pool of emerging market countries' catastrophe risk is placed in the capital markets. CaribRM played a pivotal role in developing and executing the swap transaction.
The CCRIF's capacity to service claims is based on its own reserves combined with the financial capacity of the international financial markets. This will allow CCRIF to respond to events occurring once every 1,000 years or more, achieving a higher level of resiliency than international standards.
Caribbean countries are highly vulnerable to natural disasters on average, one major hurricane affects a country in the region every two years and have only limited options available to respond. Work is also being considered to expand the scope of the coverage provided by CCRIF to other natural hazards such as floods and tsunamis.
CCRIF participating governments are: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Trinidad & Tobago, Turks and Caicos Islands.
The CGM Group is the Caribbean's first and largest regional insurance intermediary. Established in 2004, The CGM Group was formed by a merger between International Insurance Brokers (IIB), Jamaica and CGM Insurance Brokers Limited, Barbados.
IIB also operated an internationally recognized reinsurance broking division, IIB Reinsurance Brokers Limited which started some 10 year ago and is now part of this regional Group with offices in Jamaica and Barbados. In
2005 the Group acquired CGM Insurance Brokers (St. Vincent) Limited.
Caribbean Risk Managers Ltd. is the latest addition to the CGM stable; covering a wide variety of risk management disciplines including hazard and loss modelling, risk surveying, actuarial and dynamic financial analysis and disaster preparedness and business continuity planning.
