Caribbean Nations Establish Joint Disaster Insurance Pool

February 28, 2007

Caribbean countries joined by outside donors and international and regional organizations established a $47 million (euro35.7 million) insurance pool this week to soften the blow from earthquakes and hurricanes.

Called the Caribbean Catastrophe Risk Insurance Facility, the program grew out of member governments’ determination to rebuild quicker after catastrophic natural disasters.

The World Bank helped the 18 contributing governments establish the facility. It said they would save about 40 percent in premium payments by pooling their risks and would have money available immediately should disaster strike.

The facility will operate by allowing governments to buy catastrophe coverage similar to coverages for businesses to protect against interruption of operations by providing them with early cash payments after a major hurricane or earthquake.

Hosted by the World Bank, ministers from the 18 countries signed off on the arrangement at a conference with international and regional organizations and donors including Canada, France, Britain, Japan, the European Union.

Heads of government from the Caribbean Community, a regional transnational organization, asked the World Bank to help organize the facility after the 2004 Hurricane Ivan roared through the Caribbean. It clobbered Grenada, Barbados and other islands as well as the southern United States and was blamed for 121 deaths, including 52 in the United States and 39 in Grenada. An estimated 90 percent of homes on that island were damaged.

“The Caribbean Catastrophe Risk Insurance Facility will be critical in helping vulnerable countries start repairs quickly,” World Bank President Paul Wolfowitz said as he opened Wednesday’s session. Also, he said, “for the most vulnerable citizens in these countries, this facility can help them start rebuilding their lives sooner rather than later.”

World Bank statistics show that on average, a major hurricane affects a Caribbean state every 2 years. Additionally, responses them are severely limited by lack of resources; Ivan’s hit on Grenada caused losses amounting to 200 percent of the island state’s gross domestic product.

Participating countries are Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, the Cayman Islands, Dominica, Grenada, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and Turks and Caicos Islands.

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