SPHERA: Tropical cyclone risk model for the Caribbean and Central America


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Caribbean and Central American countries face a number of natural risks which will be exacerbated by climate change. Climate change is expected to lead more intense hurricanes, causing increased damage to public and private assets such as infrastructures and buildings, accelerating the erosion of coastal beaches, flooding low-lying land and triggering the loss of protective mangroves.

CCRIF offers parametric insurance products that provide coverage for hurricanes since 2007 and for excess rain since 2013. These products were designed to limit the financial impact of catastrophic tropical cyclones and extreme rainfall events on Caribbean and Central American governments by quickly providing short-term liquidity when a policy is triggered. Since the introduction of these products, CCRIF has made 36 payouts, totaling US$130.5 million, of which US$94.9 million for tropical cyclone events, to 13 of the member countries.

During the 2016/17 policy year, CCRIF began the development of a new tropical cyclone (TC) loss assessment model called SPHERA (System for Probabilistic Hazard Evaluation and Risk Assessment). Starting in the 2018/19 policy year, SPHERA will replace the current model used by CCRIF, which underpins the TC insurance product purchased by Caribbean and Central American countries.

The new SPHERA loss assessment model is able to:

  • Produce ex-ante estimates of future TC-induced losses, to be used for parametric insurance policy pricing.
  • Estimate in near real time the damages to buildings and infrastructure due to TC-induced wind and storm surge caused by events in the region.
  • Compute the payout to the insured countries due to the occurrence of a tropical cyclone according to the event parameters defined by the United States National Oceanic and Atmospheric Administration (NOAA).

The TC Model is composed by the following modules:

  • Exposure Module, which describes the built environment in each country.
  • Hazard Module, which computes in near-real time the maximum wind speed and storm surge height induced by the occurrence of a tropical cyclone. The same hazard model was also used to estimate the long-term hazard through a probabilistic assessment.
  • Vulnerability Module, which defines the probability distribution of economic loss for different levels of wind speed and storm surge height induced by a tropical cyclone.
  • Loss Module, which estimates the ground-up losses based on the maximum wind speed and storm surge height, the exposure data and the vulnerability functions.
  • Insurance Module, which – based on the policy conditions, specifically the attachment point, exhaustion point and the coverage limit – determines if a country’s policy is triggered and, eventually, computes the payout to the country.


Tropical cyclone risk model for parametric insurance purposes

Wind and storm surge risk modelling and assessment

Complete building and infrastructure exposure database

Parametric insurance for the Caribbean and Central American governments






The Caribbean and Central America


Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC)


Risk assessment


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