Caribbean Insurance Pool Not Affected by Hurricane Dean

August 24, 2007

Hurricane Dean will not trigger an insurance pool set up this year by Caribbean countries and the World Bank that provides emergency cash to islands in case of natural disaster, officials said this week.

The hurricane, which killed at least 20 people across the region and did extensive damage to bananas and other crops, failed to surpass wind speeds and other thresholds to prompt payments from the disaster pool established in February, according to fund supervisor Simon Young.

Jamaica, which sustained the brunt of Dean’s destructive path in the Caribbean, came close to being hit hard enough to receive payouts from the Caribbean Catastrophe Risk Insurance Facility.

“Had the storm been 30 miles to the north that would have triggered immediate payment in Jamaica,” Young said from the Washington office of Caribbean Risk Managers Ltd., which oversees the insurance program.

The fund, which the World Bank says is one of a kind, lets countries pool their risk to reduce individual premiums by 40 percent. Nations pay annual premiums from US$200,000 to US$2 million (euro150,000 to euro1.5 million), and in return are eligible for disaster payouts of US$10 million to US$50 million (euro7.4 million to euro37 million).

Young said the 15-nation Caribbean Community and the British Atlantic territory of Bermuda purchased deductibles that were fixed to pay out for a 20-year hurricane or earthquake. “By our estimation, (Dean) was a one-in-10 year event,” he said.

Insured losses from Dean, which raked several Caribbean islands before slamming twice into Mexico, have been estimated so far at US$750 million to US$1.5 billion (euro550 million and euro1.1 billion), according to Risk Management Solutions, which calculates hurricane damage for the insurance industry.

Caribbean Community leaders had requested World Bank assistance in establishing the emergency insurance after Hurricane Ivan caused widespread devastation in 2004.

Was this article valuable?

Here are more articles you may enjoy.