Current payout to Haiti will represent CCRIF’s largest single payout to date

The Catastrophe Risk Financing Facility (CCRIF) will make a payout of approximately US$40 million to the government of Haiti following the devastating magnitude 7.2 earthquake that struck on August 14, significantly impacting the city of Les Cayes.

This payout represents the full coverage limit under the country’s parametric insurance policy for earthquakes for the 2021-22 policy year. As CCRIF’s insurance policies are parametric, payouts are made within 14 days of an event.

CCRIF will continue to provide earthquake coverage to Haiti for the remainder of the policy year, which ends on May 31, 2022, under a special feature of the earthquake policy known as the Reinstatement of Sum Insured Cover (RSIC).

First payment of US$15 million to be made in one week

To begin to support the people of Haiti as quickly as possible, CCRIF will provide a first tranche of US$15 million to the Government within one week of the event and the remaining amount of approximately US$25 million within the 14-day window, to allow for the independent verification of the model results.

The RSIC, introduced by CCRIF in 2017, provides access to coverage after the maximum coverage limit of a country’s earthquake or tropical cyclone coverage limit has been reached. According to Haiti’s Minister of the Economy and Finance, Michel Patrick Boisvert, “the payout from CCRIF to the Republic of Haiti following the earthquake on August 14, 2021, will help finance rapid and tangible government activities geared towards supporting the poor and vulnerable affected by the earthquake in the Grand Sud region”.

He emphasised that, “given the proliferation and recurrence of natural disasters, access to parametric insurance policies offered by CCRIF and other risk financing mechanisms makes it possible to better manage the impact of these disasters on public finances and strengthen financial resilience in the medium term. For a country like Haiti, which is exposed to multiple natural disaster risks, it is imperative for us to adopt preventive measures to reduce vulnerability to shocks, while improving disaster preparedness and response”.

The August 14 earthquake was centred near Petit Troup de Nippes, approximately 78 miles to the west of the capital city Port-au-Prince and released approximately twice as much energy, as the 7.0 earthquake that affected the country in 2010. Both quakes occurred on the same fault line but the 2010 earthquake occurred nearer to the capital– about 15 miles west of Port-au-Prince.

In 2010, the government of Haiti received a payout of US$7.8 million from CCRIF following that earthquake. Since 2010 the government of Haiti has continued to increase its parametric insurance coverage for earthquakes, with the cumulative increase being about 400 per cent.

Haiti gets support in paying insurance premiums

This increased coverage has been made possible through premium support provided initially by the government of Canada and subsequently by the Caribbean Development Bank, which has paid Haiti’s insurance premiums for earthquakes, tropical cyclones and excess rainfall either fully or in part.

This current payout to Haiti will represent CCRIF’s largest single payout to date. Since the Facility’s inception in 2007, it has made 53 payouts totalling US$242.4 million to 16 of its 23 members.

Of these, Haiti has received five payouts totalling US$78.3 million (32 per cent of total payouts). This recent payout is further testimony to the success of the partnership involving member governments, the donors that support CCRIF, and the reinsurance community, in assisting countries to be able to better access disaster risk financing and reduce budget volatility following natural disasters.