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Haiti to receive US$20 million insurance payout following passage of Hurricane Matthew
Published on October 8, 2016 Email To Friend    Print Version

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On 6 October 2016, people continue to clean up in the western city of Jeremie. Hurricane Matthew passed over Haiti on Tuesday October 4, 2016, with heavy rains and winds. While the capital Port au Prince was mostly spared from the full strength of the class 4 hurricane, the western cities of Les Cayes and Jeremie received the full force sustaining wind and water damage across wide areas. Photo Logan Abassi UN/MINUSTAH

GEORGE TOWN, Cayman Islands -- CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) is preparing to make a payout to the government of Haiti as a result of the passage of Hurricane Matthew which triggered a payment on the country’s tropical cyclone policy. Based on preliminary calculations, Haiti will receive a little over US$20 million – the largest payment ever made by CCRIF.

This was revealed on Thursday afternoon by CCRIF chairman Milo Pearson at the IMF/World Bank Group annual meetings. He also thanked the Caribbean Development Bank (CDB) for paying Haiti’s insurance premiums over the last four years in support of the country’s overall disaster risk management strategy, recognising the key role of risk transfer instruments. Prior to that, in 2010 and 2011, both CDB and the government of Canada paid Haiti’s annual premium.

Since its inception in 2007, CCRIF has made a total of 15 payouts to ten member governments totalling US$38.8 million, all within 14 days of the event. This payment will represent the 16th payout, which would make total payouts approximately US$58.8 million.

This payment will be Haiti’s second payment from CCRIF. In 2010, following the devastating earthquake, CCRIF made a payment to the government of Haiti of US$7.7 million, based on the terms of its earthquake policy. That payment represented the first inflow of direct financial assistance received by Haiti at that time. The Haitian government used the CCRIF funds to cover salaries of key emergency personnel, thereby “keeping the wheels of government turning”.

CCRIF’s parametric insurance products are insurance contracts that make payments based on the intensity of an event (for example, hurricane wind speed, earthquake intensity or volume of rainfall) and the amount of loss calculated in a pre-agreed model caused by these events. Parametric insurance enables payouts to be made very quickly after a hazard event. This is different from traditional insurance settlements that require an on-the-ground assessment of individual losses after an event before a payment can be made.

Hurricane Matthew made landfall in Haiti on October 4 as a powerful Category 4 hurricane. A United Nations representative to Haiti, Mourad Wahba, said the country was facing its largest humanitarian crisis since the earthquake in 2010 left more than 200,000 dead and tens of thousands living in tents and makeshift dwellings.

Matthew brought intense rain, wind and surge waves, causing mudslides and flooding. The main bridge that links the capital of Port-au-Prince to southern Haiti has collapsed and the coast has been badly hit in the areas of Grande Anse, Port-Salut and Port-à-Piment with 1,243,000 people (including 522,000 children) affected. Les Cayes has been totally flooded. Initial estimates suggest that four million children in Haiti will be directly affected by the storm.

Earlier, as Matthew moved through the Eastern Caribbean islands, the centre of the storm passed over Barbados on September 28 as a tropical storm, triggering its CCRIF tropical cyclone policy. Barbados will receive a payout of US$975,000. There were reports of fallen trees, isolated flooding, power outages and water disruption in some parts of the island.

Both Barbados and Haiti have excess rainfall policies also. Tropical cyclone policies are designed to cover damages from wind and storm surge but not rainfall. Therefore, it is possible that these countries’ rainfall policies may be triggered as well – this would entitle them to an additional payout.

There also is a possibility that other countries in the Eastern Caribbean who were earlier affected by Matthew may receive payouts under their excess rainfall policies. The model for excess rainfall events requires a few days longer to calculate results compared with the wind-based tropical cyclone model and CCRIF will issue new information when that assessment is complete.
 
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