Payment was made last month and will be used to cover road repairs

The Government of Jamaica (GOJ) has received a $500-million payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF).

The payment was made in respect of Jamaica’s claim in its 2020-21 Excess Rainfall policy, held with CCRIF Segregated Portfolio Company, which was created to limit the financial impact of natural hazard events to Caribbean and Central American governments by quickly providing short-term liquidity when a policy is triggered.

CCRIF, which made the payout to the GOJ last month, offers parametric insurance policies for tropical cyclones, earthquakes, excess rainfall and the fisheries sector.

The insurance facility currently has 23 member states. Finance Minister Dr. Nigel Clarke, who made the announcement said the payout was related to the intense and persistent rainfall associated with Tropical Cyclone Zeta in October last year and Eta, the following month in November, which caused loss of lives and significant damage, particularly to the country’s road network.

He disclosed that the CCRIF payout will be used primarily to cover the costs of repairs to the most damaged sections of the Jamaican road network.

In a statement to the media, the finance minister reported: “We know from experience of Jamaica’s susceptibility to natural disaster events including flooding, and the significant damage it can cause to our infrastructure, which is why we have implemented a multi-layer strategy with a menu of financial instruments to manage the financing of disaster risk.”

He declared that as Jamaica continues to simultaneously respond to the COVID-19 pandemic, this payout and certainly the country’s participation in CCRIF and other similar facilities will reduce the need for the shifting of fiscal resources from other priority areas to respond to natural disasters.

Jamaica’s subscription to CCRIF, forms part of the government’s larger, multi-year framework developed to manage the financing of disaster risk. Clarke pointed to other elements of the GOJ’s Disaster Risk Financing Framework include a Contingency Credit Facility with the IDB and the capitalizing of the country’s own Contingencies Fund.

He said the GOJ is continuing to work on a catastrophe bond through the World Bank, the placement of which has been delayed due to the COVID-19 pandemic.

In 2007, the CCRIF was formed as the first multi-country risk pool in the world and was the first insurance instrument to successfully develop parametric policies backed by both traditional and capital markets. In 2014, the Facility was restructured into a segregated portfolio company (SPC) to facilitate offering new products and expansion into new geographic areas and is now named CCRIF SPC. It is owned, operated and registered in the Caribbean.