The Caribbean’s climate change resilience strategy has an insurance problem.
The limited scope of coverage for many who face adverse impacts due to climate change was put into perspective at the Reporting Climate Impacts in a Climate Justice Context Workshop at the Marriott hotel last Wednesday.
The event was hosted by Climate Analytics Caribbean, an organisation which aims to inform and improve strategies employed by Small Island Developing States and Least Developed Countries in the region to counter the effects of climate change.
Dr James Fletcher, Caricom Climate Envoy and founder of the Caribbean Climate Justice project, argued during his presentation that while the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has been established, there is still limited insurance coverage for the general public in the Caribbean when disasters strike as a result of climate change.
Referring to the funding provided by CCRIF to Caribbean countries after natural disasters, Fletcher said, “But that is only to governments. That goes to the Treasury so that the government can recover. What happens to the person on the ground? What happens to the people who are not insured or underinsured and who need to bounce back? There is no facility for them.”
CCRIF is a risk pooling facility, owned, operated and registered in the Caribbean for Caribbean governments. It was established in 2007.
Fletcher said he had spoken to the CEO of the CCRIF about that shortcoming and what potential remedy could be provided.
“Every time I’ve spoken, I’ve also made the point that we have to get parametric micro insurance so that we can provide insurance at that level, to the other household level, so that the farmers, the fishers, the households that are impacted by these extreme weather events can also get a payout, because we know that they’ve been impacted. We don’t need to go in and do an assessment,” said Fletcher.
Fletcher acknowledged there were other funds, such as the Disaster Vulnerability Reduction Fund (DVRF) and the Fund for Loss and Damage (FRLD), which have on occasions provided relief for those impacted.
However, he felt even these options were not sufficiently funded to provide the coverage required in such circumstances, as he noted the response offered in Jamaica by the FRLD following the devastation of Hurricane Melissa.
He added this was particularly worrying as many businesses across the Caribbean are not insured, and in many cases cannot be insured for such occurrences.
He explained that these funds were not developed to provide insurance in these cases, but instead to bolster recovery efforts. As a result, he noted there was a major gap in coverage which had been exposed by climate change.
Dr Fletcher explained, “The DVRP, the disaster vulnerability reduction programme, is one that is supposed to precisely reduce disaster vulnerability and increase resilience. So you look at increasing the resilience of health systems in your health centres and your hospitals, your schools, your roads, your bridges. That is supposed to help build resilience that is very separate from responding to loss and damage, be it cultural loss, be it infrastructure loss, be it any other loss, livelihood loss. That is what the funds are responding to, loss and damage and also providing insurance, insurance capacity so that we can provide support to those countries.”
He said, “If there is damage, then the people and the livelihoods in those committees will be compensated to this amount. Then that is one tangible and very relevant way of using the funds from the FRLD for helping people bounce back. But that can’t happen if we’re talking US$700 million in pledges. We need a lot more money than that. But that is certainly something parametric micro insurance, because in the Caribbean, the number of people who have insurance is a small fraction of the number of people who need insurance. Most of our communities, most of our households, are not insured in the Caribbean. That’s an unfortunate factor”
He also noted that even in the case of relocation, there are other aspects of loss which may not be properly accounted for by current relief fund metrics.
“How do you account for it, and how do you value it? And again, that’s something that when we talk about under accounting and non accounting in our system for the damage caused by climate change. That’s one of the heritage laws,” he said, making reference to the relocation of a Caribbean community after a natural disaster, “And it doesn’t matter whether you give me a nicer house. This is where my parents and grandparents lived. It is where my whole culture was located. How do you account for that? How do you deal with that? So that is certainly something that, again, for the fund, for responding to loss and damage are supposed to be addressing.”
The question of compensation for the Caribbean was also raised by Carlon Mendoza, CA’s Climate Policy Advisor for Climate Justice. He noted that while there has been a global push towards an energy transition, there has been far too little consideration for the Caribbean, which has been impacted by climate changes issues despite having little culpability in creating the wider problem.
Mendoza said, “For us, a just transition would have to focus on the resilience of our peoples and our economies and the sustainability of their livelihoods. But this is also linked to climate debt, climate finance, debt and disaster recovery, which was discussed by Dr Fletcher earlier. So this transition is a justice issue, because, again, we can’t be seen or be expected to pay for this transition when we would not have caused the issue. And that is where we would want to have the media focussing on that climate justice lens of this transition.”
Mendoza suggests that this transition should include key industries in the Caribbean including tourism and agriculture sectors, which had been negatively impacted by climate change events.
Dr Fletcher’s assessment came just over a week after regional insurance strategies in the face of climate change were also assessed during the Private Sector Forum, where insurance companies noted they could help with risk assessment and strategies to mitigate wider risks and losses, particular in the event of climate change-related events and disasters.
