Caribbean Catastrophe Risk Insurance Facility now operational

The Caribbean Catastrophe Risk Insurance Facility (CCRIF) funded by participating countries, donors and the World Bank is now operational, starting with a claims-paying capacity of US$110 million on the international reinsurance and capital markets.. Thanks to the support of the international financial markets and all parties involved, insurance coverage can be confirmed to participating countries on June 1, Caroline Anstey, the World Bank country director for the Caribbean, said in a release issued by the World Bank. This new facility is being launched just in time for the beginning of the 2007 hurricane season, which according to the experts, may be particularly severe.This is the first regional disaster insurance facility in the worldoperated by Caribbean Risk Managers Ltd. with captive management support from Sagicor Insurance Managers Ltd. Benfeld, an independent reinsurance and risk management intermediary, completed the placement of the risk transfer programmer for the CCRIF, which includes a combination of traditional excess of loss reinsurance and a funded cat swap agreement to cover parametric insurance policies issued by the facility to 16 Caribbean governments, according to a release issued by the company. After considering a number of reinsurance structures, Benfield settled on the CCRIF, which was supported by Munich Re as leader and Paris Re and Hiscox as following markets.The reinsurance structure consists of four layers: CCRIF retains the first layer of US$10 million; reinsurers write the second (US$15 million) and third (US$25 million) layers, and the top layer (US$70 million) is financed by a combination of reinsurance (US$50 million) and a catastrophe swap between the World Bank (IBRD) and the CCRIF (US$20 million). The cat swap was selected by the CCRIF as the most suitable capital markets structure due to timing pressure and pricing factors, according to a Benfield release. Participating governments in the CCRIF include Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Trinidad & Tobago and Turks and Turks and Caicos Islands.