Caribbean Development Bank (CDB) To Pay Haiti's Parametric Insurance
As per news reports dated June 7, 2017, the Caribbean Development Bank (CDB) has approved a grant to Haiti to cover the country's 2017-2018 parametric insurance premiums with CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility). The Bank will provide $3.5 million (for the fifth consecutive year) to meet the cost of the premiums for tropical cyclones, earthquake and excess rainfall coverage on this insurance premium account. CDB has further committed for continual support through regular parametrical insurance premium and other assistance and support mechanisms which aim to build resilience to the impact of natural hazards.
"Parametric Insurance" is a form of catastrophe insurance that covers mostly unusual weather events. It is a type of insurance that does not indemnify the pure loss, but ex ante (before the event) agrees to make a payment upon the intensity on the occurrence of a triggering event. It is a type of insurance, reinsurance or risk transfer arrangement that does not indemnify the full loss for the protection buyer. Under a Parametric Insurance contract, the parameters on which the ultimate payment is calculated normally include a weather or geological observation index, like rainfall over a defined period or average temperature or wind speeds for hurricanes, the intensity of an earthquake at specific locations. The lack of adequate insurance against natural catastrophe is very acute, especially in developing countries. It is a sad reality that the developing nations like Haiti are often the most exposed nations to natural catastrophes and they are also the least equipped to shoulder such losses.
We might remember that in last year, when Hurricane Matthew hit Haiti on October 4, 2016, the country received more than $20 million in compensation from the CCRIF SPC through this insurance policy.
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