In Washington: Alejandro Cedeño (202) 473-3477
Stevan Jackson (202) 458-5054
WASHINGTON, February 26, 2007 –Demonstrating support for the world’s first ever multi-country catastrophe insurance pool, donors today pledged US$47 million to the reserve fund of the Caribbean Catastrophe Risk Insurance Facility (CCRIF), which will provide participating governments from the region with immediate access liquidity if hit by a hurricane or earthquake.
Pooling their risk will save the eighteen participating countries approximately 40% in individual premium payments. This Caribbean-owned, regional institution is the first regional disaster insurance facility in the world. Donor contributions to a reserve fund are crucial towards assisting the CCRIF to become operational by this year’s hurricane season beginning in June 2007.
The Facility, which Caribbean Community (CARICOM) Heads of Government requested World Bank assistance in establishing, following the devastation of Hurricane Ivan, represents an important shift from disaster response to ex-ante disaster management and mitigation. Governments will purchase catastrophe coverage akin to business interruption insurance that would provide them with an early cash payment after a major hurricane or earthquake.
“The Caribbean Catastrophe Risk Insurance Facility will be critical in helping vulnerable countries start repairs quickly,” said Mr. Paul Wolfowitz, President of the World Bank during his welcoming remarks. “And for the most vulnerable citizens in these countries, this facility can help them start rebuilding their lives sooner rather than later.”
The Donor Pledging Conference hosted by the World Bank in Washington, DC gathered Ministers and other representatives of 18 governments of the Caribbean region, international and regional organizations, and donors such as Canada, France, the United Kingdom, Japan, and the European Union among others.
Ambassador Denis Antoine on behalf of Dr. Keith Mitchell, Prime Minister of Grenada, told participants: “The Facility provides access to catastrophe risk insurance that would otherwise not be available to Caribbean Governments. The fact that 18 countries have agreed to participate speaks volumes about the necessity for this Facility.”
Caribbean States are highly vulnerable to natural disasters--on average, one major hurricane affects a country in the region every 2 years--and have only limited options available to respond. Most recently, losses resulting from Hurricane Ivan in Grenada amounted to 200% of Grenada’s gross domestic product (GDP) and were significant in Jamaica and the Cayman Islands.
“It is important, within the context of Caribbean countries, that the issue of country risk financing for hazards related to climate changes be put squarely on the agenda,” said Dr. Omar Davies, Finance Minister of Jamaica,. “The role of the donor community is paramount in expanding the range of risks underwritten by the facility, which naturally implies an expansion in the capital requirements.”
Pledges were received from Bermuda, Canada, France, the United Kingdom, the Caribbean Development Bank and the World Bank and were announced by Graeme Wheeler, World Bank Managing Director at the end of the conference.
The CCRIF will also serve as a pilot program that could be extended to other small states, such as the Pacific islands.