View this article online: https://www.claimsjournal.com/news/international/2007/06/12/80730.htm
Oakland, Calif.-based EQECAT, Inc., a subsidiary of ABSG Consulting, has provided the hurricane and earthquake risk assessment, and the design of the parametric insurance contracts for the formation and operation of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) that became operational on June 1 (See IJ web site June 1).
CCRIF is unique in being the first regional disaster insurance facility set up by regional institutions, albeit with a lot of backing from Munich Re. EQECAT pointed out that the basic funds for the project, which have already been made, come from “participating countries and donors,” including Canada, the UK and the World Bank — through the International Bank for Reconstruction and Development. Contributions from Bermuda, France and the Caribbean Development Bank have been pledged.
EQECAT president Rick Clinton commented: “EQECAT was pleased to have assisted the World Bank and the participating Caribbean countries by providing the fundamental risk analysis and contract design necessary to launch this facility.”
He noted that EQECAT’s role included the following:
— Collection of exposure information to define the financial loss potential in each country;
— Development of risk models for hurricane and earthquake exposure in the region;
— Quantification of the potential monetary damage to the countries for various return periods using the risk models;
— Estimates of the potential government deficits arising from damage to government assets, plus the probable decrease in government tax revenues — effectively coverage for “government business interruption” — arising from damage to commercial businesses;
— The design of parametric insurance contracts which would promptly pay out policy proceeds based on the estimated wind speeds or ground shaking occurring during a catastrophe event; and,
— Furnishing of a probabilistic catastrophic risk model to the facility manager to enable the manager to price each parametric contract, as well as estimate the aggregate risk to the facility in conjunction with a dynamic financial model operated by the manager.