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:
The TC Model is composed by the following modules:
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)