Wa­ter util­i­ties in the Caribbean will now be able to ac­cess para­met­ric in­sur­ance cov­er­age through CCRIF SPC—for­mer­ly the Caribbean Cat­a­stro­phe Risk In­sur­ance Fa­cil­i­ty—to fi­nan­cial­ly pro­tect them against ex­treme weath­er events such as hur­ri­canes, trop­i­cal storms, and ex­cess rain­fall events.

An of­fi­cial state­ment is­sued by the CCRIF re­ports that the Caribbean Wa­ter Util­i­ty In­sur­ance Col­lec­tive (CWUIC) has been es­tab­lished as a seg­re­gat­ed port­fo­lio (SP) with­in CCRIF.

CCRIF—the world’s first mul­ti-coun­try, mul­ti-per­il risk pool pro­vid­ing para­met­ric in­sur­ance—of­fers prod­ucts to 19 Caribbean gov­ern­ments, four Cen­tral Amer­i­can gov­ern­ments and three Caribbean elec­tric util­i­ties.

“CCRIF of­fers five para­met­ric in­sur­ance prod­ucts: for trop­i­cal cy­clones, ex­cess rain­fall, earth­quakes, for the fish­eries sec­tor and the elec­tric util­i­ties sec­tor for trans­mis­sion and dis­tri­b­u­tion,” the state­ment ex­plains.  “The wa­ter util­i­ties prod­uct will be CCRIF’s 6th para­met­ric in­sur­ance prod­uct on of­fer.”

Ac­cord­ing to CCRIF, the CWUIC SP has been in the mak­ing for the last two years, with the In­ter-Amer­i­can De­vel­op­ment Bank (IDB) pro­vid­ing tech­ni­cal and fi­nan­cial sup­port for its struc­tur­ing, while CCRIF worked on de­vel­op­ing the in­sur­ance mod­el that will un­der­pin the wa­ter util­i­ties in­sur­ance prod­uct and al­low CWUIC to pro­vide in­sur­ance cov­er­age to wa­ter util­i­ties.

Oth­er key part­ners in this ini­tia­tive are the UK For­eign, Com­mon­wealth and De­vel­op­ment Of­fice (FC­DO), and the Caribbean De­vel­op­ment Bank (CDB).

A to­tal of US$8.45M of grant re­sources has been mo­bi­lized for CWUIC SP. This in­cludes US$7.8M from the IDB, of which US$5.6M was pro­vid­ed by the UK Gov­ern­ment through the FC­DO to sup­port tech­ni­cal as­sis­tance to fi­nal­ize the struc­tur­ing of CWUIC SP and pro­vide pre­mi­um sub­si­dies for the in­sur­ance cov­er­age to wa­ter util­i­ties in 6 Caribbean coun­tries. CDB has ap­proved grant funds of US$650,000 in tech­ni­cal as­sis­tance.

CCRIF CEO, Isaac An­tho­ny, notes that FC­DO has al­so pro­vid­ed de­vel­op­ment aid to CCRIF, in the amount of US$25M, to cap­i­tal­ize CWUIC SP. This will be used in com­bi­na­tion with rein­sur­ance to pro­tect CWUIC SP against un­ex­pect­ed loss­es from pol­i­cy claims. This US$25 mil­lion fa­cil­i­ty pro­vid­ed by FC­DO to CCRIF is in­ter­est-free with re­pay­ment af­ter a 20-year pe­ri­od.

“CWUIC ben­e­fits from CCRIF’s 16-year ex­pe­ri­ence of of­fer­ing para­met­ric in­sur­ance poli­cies to pro­vide cov­er­age against nat­ur­al haz­ards to gov­ern­ments, as well as Caribbean elec­tric util­i­ty com­pa­nies,” the CCRIF CEO ex­plains.  “With CWUIC, CCRIF con­tin­ues to lever­age its state-of-the-art para­met­ric in­sur­ance base mod­els—trop­i­cal cy­clone and ex­cess rain­fall—to pro­duce mod­els and prod­ucts for key eco­nom­ic sec­tors that are usu­al­ly not able to ac­cess af­ford­able in­sur­ance cov­er­age against nat­ur­al haz­ards”.

Ap­prox­i­mate­ly 35 wa­ter util­i­ties in 29 ter­ri­to­ries in the Caribbean have been iden­ti­fied as po­ten­tial clients for CWUIC SP. The vi­sion for CWUIC goes be­yond in­sur­ance. CWUIC has been de­signed as a cen­tre of ex­cel­lence for dis­as­ter risk man­age­ment and fi­nanc­ing for wa­ter util­i­ties and has 3 com­po­nents:

●  Sup­port to wa­ter util­i­ties in emer­gency re­sponse plan­ning and restor­ing and re­build­ing post-dis­as­ter.

●  Para­met­ric in­sur­ance to help wa­ter util­i­ties to re­spond to and re­cov­er from nat­ur­al dis­as­ters.

●  Pro­vi­sion of ad­vi­so­ry ser­vices and tech­ni­cal as­sis­tance to iden­ti­fy and struc­ture pri­or­i­ty projects to build wa­ter and waste­water util­i­ties’ re­silience to nat­ur­al haz­ards. Un­der this com­po­nent, the IDB re­ceived US$500,000 from the Co­ca-Co­la Foun­da­tion to con­duct fea­si­bil­i­ty stud­ies on wa­ter util­i­ty projects that pro­mote re­silience.

“The peo­ple of the Caribbean are on the front­line of nat­ur­al dis­as­ters, which are in­creas­ing in fre­quen­cy due to cli­mate change,” as­serts UK Min­is­ter for the Amer­i­c­as and Caribbean, David Rut­ley.

“This first-of-its-kind scheme will en­able Caribbean coun­tries to main­tain es­sen­tial ser­vices in the face of storms and floods, while great­ly re­duc­ing the fi­nan­cial bur­den on in­di­vid­ual gov­ern­ments.  The UK is de­ter­mined to play its part in help­ing small is­land de­vel­op­ing states build re­silience to ex­treme weath­er events with ac­cess to fair­er and re­li­able fund­ing,” the UK min­is­ter added.

CCRIF ob­serves that the sto­ry of the Caribbean re­gion’s vul­ner­a­bil­i­ty to hy­dro-me­te­o­ro­log­i­cal haz­ards such as hur­ri­canes, trop­i­cal storms and ex­cess rain­fall is well known, and the im­pacts of these events are be­ing ex­ac­er­bat­ed by cli­mate change, which is in­creas­ing their fre­quen­cy and in­ten­si­ty.

“Fol­low­ing nat­ur­al dis­as­ters, the in­fra­struc­ture and equip­ment of wa­ter util­i­ties, such as pump­ing sta­tions and in­take valves may be sig­nif­i­cant­ly im­pact­ed and/or de­stroyed, of­ten due to the high lev­els of tur­bid­i­ty and ac­com­pa­ny­ing flood­ing,” the CCRIF notes. “Wa­ter util­i­ties across the re­gion have lim­it­ed fi­nan­cial re­sources and of­ten­times, are un­able to re­cov­er in a time­ly man­ner to pro­vide safe drink­ing wa­ter and san­i­ta­tion ser­vices fol­low­ing nat­ur­al dis­as­ters. The im­por­tance of potable wa­ter fol­low­ing a nat­ur­al dis­as­ter can­not be em­pha­sized enough and is key to avoid­ing the in­ci­dence of wa­ter-borne dis­eases which are of­ten as­so­ci­at­ed with these nat­ur­al dis­as­ter events.”

“The sto­ry of CWUIC SP’s de­vel­op­ment is one of donor col­lab­o­ra­tion in re­sponse to an ex­pressed de­mand from util­i­ties and en­dorsed by re­gion­al gov­ern­ments,” CDB’s Vice Pres­i­dent of Op­er­a­tions, Isaac Solomon, points out.

“CDB has been an in­te­gral part of the Work­ing Group that de­signed and es­tab­lished CWUIC SP, ac­knowl­edg­ing that the wa­ter util­i­ties in all our Bor­row­ing Mem­ber Coun­tries (BM­Cs) should have ac­cess to this fa­cil­i­ty. For this rea­son, CDB has com­mit­ted ad­di­tion­al re­sources to ex­tend the an­a­lyt­i­cal work re­quired to pro­vide cov­er­age to all BMC wa­ter util­i­ties. CDB be­lieves that CWUIC SP is unique­ly po­si­tioned to change the lives of Caribbean peo­ple by en­abling wa­ter util­i­ties to main­tain busi­ness con­ti­nu­ity fol­low­ing a nat­ur­al dis­as­ter—a time when the role of wa­ter be­comes crit­i­cal to clean-up ef­forts, health­care and ba­sic hu­man needs.”

CCRIF points out that ac­cess to quick liq­uid­i­ty fol­low­ing a nat­ur­al dis­as­ter will be key for wa­ter util­i­ties as this will en­sure that they will be able to re­store wa­ter sup­ply in the short­est pos­si­ble time. In fact,

“Sev­er­al years ago, a pay­out to one of CCRIF’s mem­bers in the East­ern Caribbean un­der their trop­i­cal cy­clone in­sur­ance pol­i­cy was used to quick­ly re­pair that coun­try’s main wa­ter treat­ment plant which was a feed­er for oth­er plants on that is­land,” CCRIF re­calls.

“A ded­i­cat­ed dis­as­ter risk fi­nanc­ing and man­age­ment fa­cil­i­ty for the wa­ter and waste­water sec­tor will bring im­mea­sur­able ben­e­fits and ded­i­cat­ed re­sources for wa­ter util­i­ties to re­spond to their most press­ing needs fol­low­ing a nat­ur­al dis­as­ter,” it added.

CCRIF has re­it­er­at­ed its com­mit­ment to pro­vid­ing pay­outs with­in 14 days af­ter a mem­ber’s pol­i­cy is trig­gered.  Since its in­cep­tion in 2007, CCRIF has made 60 pay­outs to­talling US$261.8 mil­lion to 16 of its mem­ber gov­ern­ments.

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About CCRIF SPC

CCRIF SPC is a seg­re­gat­ed port­fo­lio com­pa­ny, owned, op­er­at­ed and reg­is­tered in the Caribbean. It lim­its the fi­nan­cial im­pact of cat­a­stroph­ic hur­ri­canes, earth­quakes and ex­cess rain­fall events to Caribbean and Cen­tral Amer­i­can gov­ern­ments by quick­ly pro­vid­ing short-term liq­uid­i­ty when a para­met­ric in­sur­ance pol­i­cy is trig­gered.

It is the world’s first re­gion­al fund util­is­ing para­met­ric in­sur­ance, giv­ing mem­ber gov­ern­ments the unique op­por­tu­ni­ty to pur­chase earth­quake, hur­ri­cane and ex­cess rain­fall cat­a­stro­phe cov­er­age with low­est pos­si­ble pric­ing.

CCRIF 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 Mul­ti-Donor Trust Fund (MDTF) by the Gov­ern­ment of Cana­da, the Eu­ro­pean Union, the World Bank, the gov­ern­ments of the UK and France, the Caribbean De­vel­op­ment Bank and the gov­ern­ments of Ire­land and Bermu­da, as well as through mem­ber­ship fees paid by par­tic­i­pat­ing gov­ern­ments.

In 2014, a sec­ond MDTF was es­tab­lished by the World Bank to sup­port the de­vel­op­ment of CCRIF SPC’s new prod­ucts for cur­rent and po­ten­tial mem­bers and fa­cil­i­tate the en­try of Cen­tral Amer­i­can coun­tries and ad­di­tion­al Caribbean coun­tries.

The MDTF cur­rent­ly chan­nels funds from var­i­ous donors, in­clud­ing Cana­da, through Glob­al Af­fairs Cana­da; the Unit­ed States, through the De­part­ment of the Trea­sury; the Eu­ro­pean Union, through the Eu­ro­pean Com­mis­sion, and Ger­many, through the Fed­er­al Min­istry for Eco­nom­ic Co­op­er­a­tion and De­vel­op­ment (BMZ) and KfW.

Ad­di­tion­al fi­nanc­ing has been pro­vid­ed by the Caribbean De­vel­op­ment Bank, with re­sources pro­vid­ed by Mex­i­co; the Gov­ern­ment of Ire­land; and the Eu­ro­pean Union through its Re­gion­al Re­silience Build­ing Fa­cil­i­ty man­aged by the Glob­al Fa­cil­i­ty for Dis­as­ter Re­duc­tion and Re­cov­ery (GF­DRR) and the World Bank.